The Facebook stock price shrugged off blowout second-quarter earnings and instead reacted to the pessimistic forward guidance, losing 4% after the close.
Facebook Inc (NASDAQ: FB) finished yesterday’s official trading session at $373.44, higher by $1.29 (0.35%).
After setting an all-time high of $377.54 on Tuesday, expectations coming into yesterday’s earnings release were high, and rightly so.
Both Twitter and SNAP had recently beat analyst earnings expectations, and logic suggested Facebook would follow suit. The social media giant did improve on Wall Street’s estimates, although the company warned of significant obstacles in the second half of 2021.
Q2 earning per share (EPS) $3.61 vs expected $3.04
Revenue of $29.1 billion vs consensus estimate of $27.8 billion.
Facebook also revealed a 47% year-over-year increase in advertising revenues. Additionally, daily active users remained stable at 1.9 billion.
Although, the company expects revenue growth to slow sharply in the next six months.
“We expect year-over-year total revenue growth rates to decelerate significantly on a sequential basis as we lap periods of increasingly strong growth.”
And whilst the Facebook stock price may stumble in the near term, analysts remain upbeat on the long term prospects.
“Despite some expected headwinds this year, including growing antitrust battles, we anticipate Facebook will benefit from improved ad spending and capitalize on accelerated digital transformation with new initiatives,”
Said Monness Crispi Hart analyst Brian White who maintains a buy rating and a $460 price target.
Although considering the after-hours decline, the technical picture becomes less clear.
FB Technical Outlook
The daily chart shows the Facebook stock price has climbed steadily in 2021, and basis yesterday’s closing price had gained 37% since the start of the year.
Furthermore, for the most part, the price has respected a seven-month uptrend visible at $356.00. Although earlier this month, FB declined below the trend line as markets reacted to surging Covid-19 infection rates. The 100-day moving average at $340.00 reversed the decline, and the Facebook stock price reclaimed the trend line on its way to the $377.54 record.
As long as Facebook remains above the rising trend line, the outlook remains favourable. However, a failure to do so targets the 50 DMA at $351.09, then the 100-day.
And should FB lose the support of the 100 DMA, the 200 at $318.94 comes next.
However, if the price holds trend support, it targets Tuesday’s ATH, followed by trend line resistance at $383.00.