FB – What to Do With Facebook Stock After Earnings

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Shares of Facebook Inc (NASDAQ:FB) exploded higher in Thursday’s trading session following the company’s blowout quarterly results on Wednesday after the close of trading. Facebook beat just about every analyst estimate, leading to a series of stock upgrades and higher price targets.

Beat the BellFrom a technical perspective, Thursday’s rally pushed FB stock right to its previous all-time highs from last November, which could act as a little near-term resistance. Upside momentum, however, looks promising, so active investors could look to jump on Facebook bandwagon for an upside trade.

In terms of the numbers, Facebook on Wednesday reported earnings per share for the fourth quarter of 79 cents — well above analyst estimates of 68 cents. On the top line, the company saw revenue of $5.84 billion, also well above estimates for $5.37 billion.

FB continued to see good user growth, and most importantly, good growth in mobile advertising revenue, where Facebook is the reigning champion. A stunning 80% of the company’s advertising revenue in the last quarter came from mobile advertising, which is why so many analysts are so hot for Facebook stock.

In the bigger picture, Wednesday’s blowout earnings report by Facebook only further reinvigorates the piling into the stock by traders and investors. In a yield-starved investment environment where U.S. and global economic growth is slowing, Facebook remains one of few well-known and believable growth stories.

It doesn’t hurt that both the investment and retail crowd uses Facebook on a daily basis and that FB stock as a vehicle is ultra-liquid.

Facebook Stock Charts

Looking at Facebook stock since the company’s initial public offering in 2012, we see that the rising wedge pattern has defied gravity and in fact looks to have established a series of solid technical support areas that FB can now continue to work higher from.

More specifically, note that both the flush-out selling in August 2015 as well as the January weakness managed to hold shares above the 2012 support line on a weekly closing basis. Furthermore, Facebook stock has as a result formed a higher base that increasingly looks to want to push the stock our of the rising wedge pattern to the upside indefinitely.

Facebook stock weekly chart
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On the daily chart, note that the August 2015 lows and the January lows marked on the above chart also matched up with the red 200-day simple moving average. Thursday’s high-volume 15.5% rally in FB stock came on a big breakaway up-gap, which all else being equal should have started off the next upside momentum move.

Facebook stock chart daily
Click to Enlarge

Active investors and traders could look to buy some FB stock in the $107-$110 area for a next upside target near $116 while respecting any potential sharp bearish reversal of Thursday’s rally as a warning sign.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/01/facebook-stock-fb-charts-earnings/.

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