Facebook Inc (NASDAQ:FB) stock needs to stay above $110 in order for the multi-year uptrend to remain in place, according to one chart technician. But can it hold that level in light of how sentiment is shifted? Analysts at Credit Suisse believe investors aren’t fully appreciating Facebook’s next two billion-user properties: Messenger and WhatsApp. The fact is that messaging platforms are hot right now, and the social network is right in the thick of it with both of those properties.
Key support level for Facebook (FB) stock at $110
In a post on Investor Place, Serge Berger of The Steady Trader argues for buying “the dips” and selling “the rips” in Facebook Inc (NASDAQ:FB) stock. He notes that the stock’s 200-day simple moving average has been serving as a key support level since the middle of 2013 when the current uptrend started. He adds that any weekly break or close below $110 per share would jeopardize this uptrend.
On the flip side, he said any move into the high $120 range “would stretch the stock on upside for the near- to medium-term.” He adds that if Facebook Inc (NASDAQ:FB) stock does break into this area, it would probably result in some consolidation. Additionally, he said if Facebook stock is able to push higher than $118 to $120 per share “with authority” following earnings, he would go long on it “with a price target in the high $120s.”
Facebook (FB) to report earnings July 27
Credit Suisse analyst Stephen Ju and team said in a July 15 report that their checks indicate that budget allocations continue, especially for Instagram and Facebook’s Premium video. However, they add that “relatively muted” App Install pricing which is seasonally and sequentially flat appears to be offsetting this.
They explain that sentiment on Facebook Inc (NASDAQ:FB) stock has shifted toward the negative due to concerns about crowding and difficult comparisons in the second half of the year. However, they continue to rate the stock at Outperform with a $145 price target because they don’t think investors are fully appreciating the social network’s other properties. They believe the Street is not factoring in enough contributions from Instagram and that it is now assigning optionality to monetization for Messenger and WhatsApp, which will likely come eventually.
Because they expect Messenger and WhatsApp to one day reach 1 billion users like Facebook itself and they expect both to be monetized one day, they believe the company will be able to see long-term revenue growth without significantly increasing the amount of ads shown in News Feeds. They add that near-term drivers for growth at Facebook include Instagram, Premium Video and DPA.
Shares of Facebook Inc (NASDAQ:FB) stock edged lower by 0.32% to $116.91 in afternoon trading on Friday.