Facebook, Inc. (NASDAQ:FB) A History Of Beating Estimates
Betting against Facebook Inc. (FB) and its stock has been the wrong call. Shares have powered higher since the beginning of October, rising by over 26%, which is double the pace of the S&P 500 increase during that time. Now, with fourth quarter earnings around the corner, it may not be the time to bet against the stock’s recent move higher.
The company will report fourth quarter results on January 29, following the close of trading. Analysts do not forecast healthy fourth quarter earnings, estimating an increase of 5.6% to $2.51 per share versus the same period a year ago. Meanwhile, revenue is likely to be stronger and is forecast to have increased by 23.5% to $20.9 billion
Perhaps more important will be the guidance the company lays out on the conference call. Currently, first quarter consensus estimates are for earnings growth of about 10% to $2.08 per share versus $1.89 in the same quarter a year ago. Meanwhile, revenue is forecast to rise by around 23% to $18.6 billion from $15.1 billion in the first quarter of 2018.
Costs for the company will continue to be a focus in 2020 for investors as it was in 2019. Based on the company’s third quarter conference call, those expenses are likely to rise in 2020 to a range of $54 billion to $59 billion. That is higher than Facebook’s expectations for costs in 2019 of $46 billion to $48 billion. Additionally, the company noted it expected 2020 capital expenditures to rise to $18 billion at the mid-point from $16 billion in 2019.
Technical Trends Are Bullish
The technical chart suggests that Facebook’s stock rises by an additional 7% after reaching a new all-time high closing around $222 on January 17. The trend in the shares is higher at this point and suggests it climbs to around $238 in the weeks ahead, based on a projection of the move higher in the stock from December 13 through January 13. Additionally, the relative strength index is suggesting that momentum has moved into Facebook, and supports the stock rising longer-term.
Facebook may have history on its side when it comes to reporting results and even the potential for the stock gaining in the weeks ahead.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 204.30.
The projected upper bound is: 229.30.
The projected lower bound is: 216.09.
The projected closing price is: 222.70.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.
A hammer occurred (a hammer has a long lower shadow and closes near the high). Hammers must appear after a significant decline or when prices are oversold to be valid. When this occurs, it usually indicates the formation of a support level and is thus considered a bullish pattern.
A hanging man occurred (a hanging man has a very long lower shadow and a small real body). This pattern can be bullish or bearish, depending on the trend. If it occurs during an uptrend (which appears to be the case with FACEBOOK INC A) it is called a hanging man line and signifies a reversal top. If it occurs during a downtrend it is called a bullish hammer.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 83.1504. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 1 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 72.69. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 3 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 85. This is not a topping or bottoming area. The last signal was a sell 1 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 18 period(s) ago.
Rex Takasugi – TD Profile
FACEBOOK INC A closed up 0.370 at 222.140. Volume was 18% above average (neutral) and Bollinger Bands were 62% wider than normal.
Open High Low Close Volume___
222.030 222.290 220.530 222.140 15,905,944
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 218.33 203.49 190.78
Volatility: 18 21 30
Volume: 13,425,301 12,926,383 14,858,798
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FACEBOOK INC A is currently 16.4% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect very strong flows of volume into FB.O (bullish). Our trend forecasting oscillators are currently bullish on FB.O and have had this outlook for the last 64 periods. Our momentum oscillator is currently indicating that FB.O is currently in an overbought condition. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.
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