Skip to content

We want to clarify that IG International does not have an official Line account at this time. We have not established any official presence on Line messaging platform. Therefore, any accounts claiming to represent IG International on Line are unauthorized and should be considered as fake.
CFDs are complex instruments. 70% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.
CFDs are complex instruments. 70% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

Facebook stock price nears trendline resistance ahead of earnings

Having seen its stock price wilt since August and its record high, can Facebook restore a more bullish outlook with Q4 earnings, despite antitrust fears?

Facebook Source: Bloomberg

When is Facebook’s next earnings release?

Facebook reports its fourth quarter (Q4) earnings on 27 January. Earnings will be published after the market closes.

Facebook earnings – what does the Street expect?

Facebook is expected to have reported headline earnings per share of $3.39, up 16.3% year-on-year (YoY), while revenue is forecast to rise 25.2% YoY to $26.39 billion. The company has beaten forecasts on both metrics in all eight of its previous eight earnings reports.

Like many tech stocks, Facebook reaped the benefits of the global lockdown and the shift to online work and shopping for millions, allowing it to reach people via its platform and the advertising therein, and thus increasing its attractiveness for companies looking to reach new audiences. There are some concerns for the stock, notably the potential for antitrust legislation under the new administration, and a drop in average time per user spent on the site following the recent clampdown on accounts in the wake of the Capitol riots in the US.

But overall, Facebook continues to be a powerhouse stock. Free cashflow has gone from $7.7 billion in 2015 to $21.2 billion in 2019, and shows no sign of slowing down. It is this that has driven the stock rally, investors sticking with a proven winner that appears to have the ability to generate cash at will.

How to trade Facebook earnings

Facebook stock dropped by 0.62% on the day of its last earnings release in October 2020, although the stock had been much higher during the session and had then fallen. The average move on results day is 5.81%, but current options pricing points towards a move of 5.66%.

A total of 56 analysts cover Facebook stock, with 47 ‘buy’ recommendations, six ‘holds’ and just three ‘sells’. The median analyst target price is $325.39, a premium of 18.5% to the 22 January close of $274.50.

Facebook stock price – technical analysis

Facebook stock has struggled since its record high at the end of August, underperforming benchmark indices. Trendline resistance from that August high has capped upside, with rallies in November and December turning lower from trendline resistance. It also broke below trendline support in late December, beginning its fall to the 200-day SMA (simple moving average) at $251.41.

The pre-earnings rebound from the 200-day SMA has carried the price back towards trendline resistance, and will be watched closely. Signs of a failure to break above resistance and a key reversal will bring out the sellers. Meanwhile, a break higher brings a move towards $292.00 into view, the area that saw the November and December bounces falter.

Facebook chart Source: ProRealTime
Facebook chart Source: ProRealTime

Facebook – still a great momentum play?

An investor’s view of Facebook depends on whether they think that antitrust moves and a general drop-off in popularity in the US will come home to roost, or whether the mountains of cash it generates provide a rationale for investing.

The stock has gone through a tough few months (at least in terms of previous performance), and it seems like Q4 earnings could be make or break moment, at least in the short term.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.