Facebook Shares Hit Record Increases, Beats Estimates

Facebook CEO Mark Zuckerberg on
Facebook CEO Mark Zuckerberg holding a pair of the touch controllers for the Oculus Rift virtual reality headsets on stage during the Facebook F8 conference in San Francisco, California April 12, 2016. Photo: Reuters

THE social networking giant, Facebook, has again beat market expectations for profit and revenue yet again in the latest quarter, pushing up its shares to a record high on Thursday and allowing it to overtake Warren Buffett’s Berkshire Hathaway Inc as the fifth biggest U.S. company by market capitalization.

Facebook’s shares rose as much as 4 percent to $128.33, boosting its market value by $14 billion to $367 billion – enough to eclipse Berkshire’s market cap of about $355 billion.

At least 20 brokerages raised target prices on Facebook’s stock, with a median target of $150.

Of 50 analysts covering the stock, 46 have a “buy” or higher rating, 3 have a “hold,” and only one has a “sell.”

Analysts said Facebook’s “video first” strategy would help drive the company’s growth well into the future as more advertisers move money to mobile platforms.

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Facebook also has a huge opportunity to monetize its WhatsApp and Messenger services as well as do more with photo-sharing app Instagram and virtual reality unit Oculus.

“While FB could be reaching a saturation point in more developed markets, we believe there several levers to drive rev growth,” Mizuho Securities analyst Neil Doshi said in a note.

These include more videos to increase time spent online and new ad formats, he said, as well as monetizing other services.

Doshi raised his price target to $150 from $140.

Facebook, which now has more than 1.7 billion monthly users, said its ad revenue surged 63 percent in the second quarter, with mobile accounting for 84 percent of the total.

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“To give a sense of the scale of Facebook’s beat, its advertising outperformance vs. consensus expectations was almost as large as the total advertising revenue base in the quarter for the industry’s #4 player, Twitter,” Pivotal Research analyst Brian Wieser said in a client note.



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