Facebook stocks are likely to continue their recovery, reaching over $300 before the US presidential election
Fund managers raised their Facebook target from $310 to $320 (up 13%)
Facebook will monetize WhatsApp messaging, and this will enable companies to sell products within the app.
Facebook (NASDAQ: FB) stock rose from $261 to $285 in less than five days, and the current price is approximately $284. Facebook has found strong support above $260, but the price is still unable to break through the $300 resistance.
Fundamental analysis: Facebook is moving to monetize WhatsApp messaging
Even with the COVID 19 pandemic, Facebook’s business is doing well and the company will see an increase in revenues this year. Facebook is moving to monetize WhatsApp messaging, and this will enable companies to sell products within the app.
India is one of Facebook’s largest user bases and digital advertising in India is expected to grow 27% over the next 5 years. While valuations are near multi-year highs, some fund managers have raised their Facebook target from $310 to $320 (up 13%).
According to analysts, the Facebook share price will continue to recover and will be above USD 300 before the US presidential election on November 03. The company is reporting profits a few days before the election, which will be the focus of investor attention.
The company increased its 2019 revenues to $70.69 billion from $55.83 billion in 2018, and its growth projects will ensure that the numbers will continue to rise in the future. At its current share price, Facebook could be a very good short-term investment with solid growth prospects.
I said short term investment because I believe that this stock, with a market capitalization of $811B, is overvalued and is only an opportunity for short term traders. Profitability metrics also confirm this, the P/E ratio is above 30, which confirms that this stock is expensive.
It is also important to note that Barclays analysts see Facebook’s valuation at the level of bubbles and they also believe that this company is overvalued. There are some obvious risks in trading this stock at this time, but the stability and size of Facebook will always attract potential investors and traders.
Technical analysis: Bulls keep control of prices
Data source: tradingview.com
On this diagram I have marked important resistance and support levels. The important support levels are $260 and $240, $300 and $320 represent the resistance levels. If the price jumps above $300, it would be a signal to buy Facebook stock and we have the open path to $310.
A rise above $320 supports a continuation of the upward trend for Facebook, and the next price target could be around $330 or even $350. On the other hand, it would be a strong “sell” signal if the price falls below $260, and we have the open path to $240.
Facebook shares are struggling to overcome the important resistance at $300, even though the “cops” are keeping control of the stock price. There are some obvious risks when it comes to trading Facebook stock, but as long as Facebook’s share price remains above $260, the stock remains in the bull market. The technical picture suggests that the price could rise above the $300 resistance again, but in my opinion this stock is a little overvalued. Facebook is a stable company with a good position in the market, but the current risk/reward ratio is not good for long-term investors.