Facebook Inc (FB) stock surged higher in early trading on Tuesday, approaching its all-time high before reversing course and tumbling into the red. Several analysts boosted their price targets for Facebook Inc (FB) stock in the wake of last week’s earnings report, and this week, the trend continues.
Facebook Inc (FB) stock target raised to $180
MKM Partners analyst Rob Sanderson boosted his price target for Facebook Inc (FB) stock from $150 to $180 per share and reiterated his Buy rating in a note dated May 8. He feels that the shares are inexpensive even though a deceleration is probably coming in the second half of the year.
Facebook Inc (FB) management said again on the earnings call last week that they plan to limit ad load growth later this year and thus expect ad revenue growth rates to slow “meaningfully” after the middle of this year. Sanderson added that consensus suggests a 36% increase in ad revenue for the second half of the year, versus the 47% that is forecast for the first half of this year and the 51% increase that was recorded in the first quarter.
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Facebook’s expenses still growing
The company’s GAAP expenses increased 39% in the first quarter, and management had guided for a 40% to 50% increase for the full year. Non-GAAP expenses increased 60%, versus the full-year outlook of a 47% to 57% increase. Facebook Inc (FB) management also said last week that they intend to keep investing despite the expected deceleration in ad revenue.
Wedbush analyst Michael Pachter boosted his price target for Facebook Inc (FB) stock from $175 to $185 last week and noted that it takes money to grow. He expects the company’s expense growth to remain in focus in the near term but believes those investments will drive long-term expansion in EBITDA and continuing growth in revenues.
Short interest in Facebook stock on the rise
Facebook Inc (FB) stock has been a rising darling and constituent of the beloved and highly-owned “FANG stocks” (with Amazon, Netflix and Google/Alphabet). As such, it comes as no surprise that Facebook Inc (FB) stock is one of the top ten most-shorted stocks in the U.S., according to data from financial analytics firm S3 Partners.
Research head Ihor Dusaniwsky reported last week that total short-sale losses in the FANG names totaled more than $3.3 billion, but despite that, short interest in them has risen every month so far this year. He reported last week that they’ve been seeing an increase in short interest used as portfolio hedges and outright risk positions. He added the rising short interest in Facebook Inc (FB) stock and the other FANG names is more about “traders placing negative bets on a group of stocks that are up 26% for the year and doubling NASDAQ’s returns rather than delta hedging their portfolios.”
Short interest in Facebook Inc (FB) stock was up by more than 30% year to date through Friday, according to S3 Partners’ data. Short-sellers added more than $653 million to their positions year to date through Friday.
Shares of Facebook Inc (FB) stock ticked lower by as much as 0.38% to $150.49 during regular trading hours on Tuesday.