Thursday 3 December 2015


The social media giant is working on a number of objectives but might not be able to grow more than it has already achieved. Year 2015 has been an exceptionally good year for Facebook stock. The social media company is one of the companies who will be in the top gainers of the day on the trading session that will be held on Monday. Despite of the fact that many businesses, as per the S&P 500 index, had a disappointing year, it had been amongst the top and best performers of the year. The year to date stock performance of the social media giant’s stock is at 2% as per the S&P 500 rating but the social media’s stock itself has climbed 45%. Even in the fourth quarter, the performance of Facebook’s stock has been impressive. The stock of the company is up by more than 30% in the current year. The analysts think that it is the perfect time to sell the stock of the dominant social media network. Investorplace.com believes that Facebook is going to be around for a very long time and even its share price will not be going to zero any time soon but what the analysts believe now is that the social media’s stock is overpriced and overvalued. The trading of the stock if valued at more than 36 times forward while Wall Street is valuing it more than twice at 17.5 forward earnings. After the third quarter, Facebook stock went through its all-time high share price of $110. Since it hit the 52-week high of the share price, the stock of the social media website has been slightly slopping down. During the previous trading session, the stock price was called off at $105.45, which was quite close to its 50-day moving average of $102.78. In case the stock of the company manages to cross its downward slopping 50-day average, it will be bringing the shares even lower than they already are. In a financial thinking, the investors do need to look at the prospectus as to where the social media company will grow now. The social media giant already has over 1.5 billion daily active users even if this number increases a little bit it will not be able to bring growth to the company as it will entirely incremental. Furthermore, the less difference that will be made from more users will also be because this number will come from more remote areas. The new users now who will be joining Facebook will be from the less developed with less money in their pocket crowd which would mean less advertisers.

No comments:

Post a Comment