Keep an eye on Facebook (FB).
Over the last few days, shares of the social media giant slipped from a high of about $344 to $312.14 on its earnings, and ad spending concerns over at Snap Inc. However, the pullback appears to be overkill, as RSI, MACD, and Williams’ %R collapse into oversold territory.
For one, earnings weren’t terrible.
Revenue came in at $29.01 billion, which was short of expectations for $29.45 billion. However, FB did beat on earnings, which came in at $3.22 as compared to expectations of $3.17. The company also saw a 12% jump in monthly active users to 3.58 billion, as compared to expectations of 3.51 billion users.
Two, according to Mark Mahaney, head of Internet research at Evercore ISI, as quoted by CNBC, the company had prepared itself for the advertising changes from Apple.
“Snap disappointed people last week and Facebook just did, too. I’m struggling to recall the last time that Facebook missed revenue and lowered revenue estimates like this. The good news is, however, that unlike Snap, Facebook management told people about this IDFA [Identifier for Advertisers], this Apple risk, they’ve been talking about it for a year, and then the stock got slapped down because of that, slapped down because of the Snap results and so the risk-reward wasn’t nearly as … tilted as it was for Snap.”
Three, according to MKM Partners analyst Rohit Kulkarni, “The tone of the management team, outlook for 4Q, and the new disclosures that they’re going to do with Facebook Reality Labs, plus the buybacks…add to a pretty thick silver lining in my opinion,” as quoted by Yahoo Finance. “When you look beyond the Apple headwinds into 2022, Facebook is going to give you more disclosure, going to buy back more shares, and obviously they are going to disclose that the core business is generating a lot of cash.”
Also, the company just announced it’s adding $50 billion to its buyback program.
In short, investors may want to use the current FB crisis as a long-term opportunity.
The post It May Be Time to Buy Shares of Facebook on the Pullback appeared first on Morningology.
