Facebook Inc (NASDAQ:FB) shares seem to be making a remarkable recovery this month. In Wednesday’s pre-trades Facebook Inc (NASDAQ:FB) continued its climb, gaining another half percent and increasing to almost $28 per share. Shares of the company were trading at $36 each less than six months ago, and they fell more than 50 percent. Many analysts believed it would drop down to $10 per share.
So what’s behind the remarkable recovery of Facebook Inc (NASDAQ:FB)? CNBC said investors are becoming bullish on the stock for three reasons. First the company’s Sponsored Stories, which are one of its newest ways to offer mobile advertising, seem to be doing well. It appears that Facebook users are interacting with those ads, which will make it possible for Facebook to build large amounts of revenue through that form of advertising.
The social media giant’s new ad network also appears to be doing well. The system makes it possible for advertisers to target users with their ads based on what they do in the real world, rather than just on Facebook. Advertisers who are taking advantage of this new network are reaping great returns on their investment. And finally, employees and early investors are now allowed to sell their shares, and the stock is doing well in spite of this.
CNBC speculates that shares of Facebook will trade at 15 times their earnings per share, just like Google Inc (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), and other tech giants do. At this point, Facebook shares are smashing that expectation, trading at 45 times the earnings per share that are expected next year, so it could certainly drop soon—unless investors look past that and buy it because of the stock’s momentum.
So where will shares of Facebook Inc (NASDAQ:FB) go now? Only time will tell. As CNBC points out, the risk with this stock is fairly high right now, but investors who take the gamble and manage to win through the stock’s momentum will reap great rewards.