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Strength Seen in Facebook (FB): Can Its 7.3% Jump Turn into More Strength?

Facebook FB shares soared 7.3% in the last trading session to close at $329.51. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 4.3% gain over the past four weeks.

The upswing in share price came after Facebook posted impressive first-quarter 2021 results which reflected 47.6% year over year increase in revenues to $26.17 billion driven by solid advertising revenue growth of 45.9%. Meanwhile, Facebook’s Asia-Pacific, Europe, the United States & Canada and Rest of World advertising revenues grew 46.3%, 52.8%, 42% and 47.2%, on a year-over-year basis, respectively.

Price and Consensus

 

This social media company is expected to post quarterly earnings of $2.49 per share in its upcoming report, which represents a year-over-year change of +38.3%. Revenues are expected to be $25.5 billion, up 36.5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Facebook, the consensus EPS estimate for the quarter has been revised marginally lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on FB going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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