Earnings season is in full swing again, and it’s time to look for opportunities within the “FAANG” stocks. We’ve already seen Netflix, Inc. (NASDAQ:NFLX) rally on strong subscriber numbers (even if spending put a wrench in the works), and Apple Inc. (NASDAQ:AAPL) and the rest are set to follow in the next two weeks.
Today, we’re taking a look at one of my favorites: Facebook Inc (NASDAQ:FB). The company has historically surprised investors in the earnings confessional, with its previous report eliciting a post-earnings rally in FB’s stock price of nearly 3%.
With FB stock today falling alongside the rest of the market, it could provide an excellent opportunity for bullish investors to turn a profit … especially options traders.
By the numbers, Facebook is expected to report a 17% surge in earnings to $1.28 per share from $1.09 per share in the same quarter last year. Furthermore, revenue is seen rising 40.3% year-over-year to $9.84 billion.
What’s more, expectations among certain Wall Street analysts may be even higher for FB stock. According to EarningsWhispers.com, the whisper number for FB’s third-quarter results comes in 12 cents higher at $1.40 per share. With Facebook historically topping the consensus estimate, even the elevated whisper number could be on the low side.
Click to Enlarge But Wall Street has a long and storied love affair with FB stock. According to Thomson/First Call, 42 of the 46 analysts following Facebook stock rate the shares a “buy” or better. The 12-month consensus price target, meanwhile, rests at $196.18 and represents a meager premium of only about 11% to Wednesday’s close.
Turning to the options pits, FB stock options traders are also quite bullish on the company’s prospects. Currently, the November put/call open interest ratio comes in at a 0.68, with calls easily outnumbering puts among options heavily affected by Facebook’s quarterly report.
Surprisingly, peak call OI for the series rests at the just-overhead $180 strike (not the $200 strike, as I would have suspected).
Overall, November implieds price in a potential post-earnings move of about a 6% move for FB stock. This places the upper bound at about $185.61 — explaining the lack of November call OI at $200 — while the lower bound lies at $164.39.