Facebook (FB) Stock Analysis – Stock Soaring! Is It Time To Buy Facebook?

by birtanpublished on August 4, 2020

What is going on investors back again exciting day of earnings today we're taking a look at facebook ticker symbol fb they just reported earnings right after the bell and we see ba-boom this stock is performing

Very nicely so investors are really liking what we're seeing this after hours trade is accelerating you see today we closed it about 234 dollars a share after hours were ticking all the way up

To 250 dollars per share we'll jump into the earnings beat we'll take a look at the numbers see what investors are liking so much and then we'll jump over the chart here

And see what happened as the stock is accelerating upwards this is a 670 billion dollar market cap company compared to some of the other tech companies a 32

Uh p e ratio is actually relatively quote unquote cheap when you compare it to some of these tech companies so facebook has been on my list as a stock that i try to add to regularly so full disclosure i own shares of

Facebook now right after earnings release we see the stock ticked up quite a bit about 16 but obviously it accelerated even further now we're going up into the seven percent because

This earnings release is absolutely stellar from the top line to the bottom line let's just jump right into it so we've got three months here ended in june we got six months ended

Here we got 19 over 20 we see here our top line revenue very easy to understand facebook's balance sheet i recommend if you're new to investing a stock like facebook is good to look at

Because they don't really have a whole lot going on we've got this revenue which comes in through uh primarily ad dollars and that ticked up nicely about two billion dollars we see for a six month

Period we're up uh closer to five billion dollars now let's see how well they're keeping cost in check and they're absolutely doing a tremendous job at this

Look at this it was 226 in the previous period excuse me and then 12724 so that's an increase of less than call it 500 million dollars and again this is in a quarter where they grew revenues by nearly

2 billion so these costs are absolutely in check and as you see revenues accelerate by quite a bit the cost firm and expenses are scaling up nicely you love to see that and again we ticked

Up call it five billion dollars here and we see cost actually tick up uh less than 600 million dollars that is absolutely sensational so as long as this top line number can continue to grow for facebook

You'll likely see that flow down to the bottom line we see here bottom line back in the previous period we've got net income here was 26 billion boom all the way up to 57 looks like maybe they paid

Less in income taxes here and some other stuff man they really did a nice job here driving profit to the bottom line in a quarter where again they raised sales by about call it

Two billion dollars we see for the six months ended it is absolutely sensational this company made five billion dollars net income in the previous six months and now it's all the way basically

Doubled all the way up to 10 billion dollars now you can see why this stock is reacting the way it is if you ever confused about when a company reports and all you do is

Kind of read these headline numbers i encourage you if you want to read these press releases and these headlines by all means but jump in here to the financials and take a look at top line and bottom line and typically if the

Stock is reacting really well something like this probably happened where they went they grew revenues uh you know within expectations maybe slightly above but boom they really drove a ton of net

Income to the bottom line i don't know if that's because they got employees working from home or what it is but they really really really controlled cost here i see provisions for

Income tax down actually quite a bit so it looks like maybe their effective tax rate went down in the quarter as well and so or during this year as well and so that's really driving a little bit of

Profits you know i would call that about at least a billion of these profits is coming it looks like from a reduced tax rate so but the rest of it is coming from

Cost efficiencies and rising sales as well that's absolutely phenomenal you gotta love that now from a per share basis that yes they're compensating their employees with stock but not at a really

Aggressive rate this is uh you know virtually flat year over or quarter over quarter period over period here with our dilution so things are looking really good from that sense now

Obviously the balance sheet is probably going to be sensational as well when you have that good a quarter things are probably going to look pretty darn good over here facebook's got 21 billion dollars worth of cash

It ticked up from 19 they've got these marketable securities as well those ticked up a little bit as well man that's uh call that 58 billion dollars in cash and this is a company that is basically

Printing money on their operating statement so man this is the reason why tech stocks continue to go up and continue to lead the market is because their top and bottom lines

Are sensational and they're extraordinarily well capitalized because you know a lot of this is ipo money or money that they've earned from operations now from a liability

Side there's probably not a whole lot here i don't see a whole lot on this liability side that i would really be worried about take a look at total liabilities here

Can you believe this 32 billion dollars 29 billion dollars this is total liabilities not current liabilities not uh you know long-term liabilities we're talking about total liabilities at

29 billion dollars and this is a company with 38 billion excuse me 58 billion dollars in cash and 10 billion dollars in net income for the six months

It is uh absolutely phenomenal we can take a look at cash flows here and then we're going to jump over the chart i'm trying not to to gush over this too much but this is absolutely phenomenal

If you're a facebook investor if you're not you should wonder why you have not bought shares of facebook because this is just absolutely incredible we see cash flows were impacted a little bit

During the quarter um it looks like maybe some accrues expenses here and some other stuff kind of came out but it's not too bad so when you stretch it out to a six month view it's very much in line i

Wouldn't give them too much i wouldn't worry too much about cash flows uh with facebook at least in this quarter finally we've got financing activities to me

Facebook looks like a company that can either they're they are doing this buyback and so this is something that they're doing this is very small amounts of money compared to what they're what they're

Taking in so over the last six months they've done 26 a billion in a buyback and in the current quarter they did one point call it 14 this is something that they can either

Accelerate or i think what would be even more exciting for facebook investors is do a small dividend like a one percent dividend kind of like visa does or or some of these other companies that are still

Growing but maybe return some capital to to shareholders and encourage like the holding of the stock i think that would be very good for facebook it wouldn't surprise me if it happens

Uh but again it's not something i would totally be expecting as a shareholder now i drew this ched line in here we're taking a look at facebook here on the chart we're going to take a look

Where can we maybe buy in as we can see here the stock price is now basically off the charts here it's all the way up here into this 250 yeah 252 range it's all the way up here okay we ended

The day you know much closer to down here so before earnings i actually drew this trend line in and we actually saw that the stock broke trend here um several weeks ago once it broke this

Trend line you see it broke down and then it came up and hit its head on this trend line and and it didn't want to break loose well what happened today during earnings we're going to be breaking all

The way back up above this trend line this trend line should provide support for a long period of time now do i want to run out and buy facebook shares

Um maybe although i already own some shares if you want to wait for it to pull back there's potentially maybe you'd have a shot to if it pulls back into this 240 range

Even higher than that maybe this two call it 247 range up here there are some ranges here where if this stock pulls back to 247 i wouldn't mind it there and 240 as well again this is maybe for new shareholders

For me i'd probably wait for a deeper pullback although i don't know if that something like that will really happen maybe you can have see this stock retraced back down to this 230

I thought if facebook would have would struggle on their earnings reports i thought we could retrace all the way back to 220 but obviously what we just saw was absolutely phenomenal and i wouldn't get maybe too greedy with

This one because this is a stock that seems like it's got a ton of momentum behind it despite some of the negative things you read about advertisers pulling ads off the platform

And obviously their congressional hearing yesterday things are still roaring for facebook even though there's lots and lots of stuff going on in the world i personally would see if you could

Maybe if you want to get greedy you could try to get shares back here at 247 if you wanted to get into this but the momentum is back up to the upside for facebook the momentum should swing it

Had broken down it went sideways and now boom we're back up i think the train has left the station and this one will probably trend higher for the coming months and weeks ahead as they head into a quarter

That's typically very good for them the holiday shopping season and that period of time is good for advertising and obviously good for facebook as well so hopefully you guys enjoyed

That video we'll be back again very soon i'll be covering amazon apple google and more today and later this week thanks for tuning in good luck with your investments

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