Facebook Inc. (NASDAQ: FB) stock soared to a record high of $214.58 on Tuesday as the market experts believe encouraging growth opportunities exist for the social networking giant. The shares have risen over 54% in the past year and 174% in the past five years.
The stock has been trading between $211.75 and $214.56 on Tuesday, which is much better than the 50-day and 200-day moving average of $201.98 and $192.22, respectively. This has been used by the traders to select on the entry or exit point as moving averages act as support and resistance.
The company has shown robust performance during the last year among the FAANG companies (Facebook, Apple, Amazon, Netflix, and Google). But this alone could not determine whether Facebook could outperform in 2020 as there remained certain challenges and regulatory hurdles that could narrow the growth. Still, investors believe that the company could give a tough fight in the competition.
Facebook turned strong as half of the world is using its platforms. The company’s growth looks stable backed by the increasing number of users and data. Apart from this, advertising revenue could continue to increase in the medium term despite a rise in the costs associated with the advertisement. The company generates substantially all of its revenue from advertising.
The company continued to invest, based on its roadmap, in its most developed ecosystems, Facebook and Instagram, as well as long-term technology initiatives, such as connectivity, artificial intelligence and augmented and virtual reality. This also includes driving growth and building ecosystems around products that already have significant user bases, such as Messenger and WhatsApp, as well as continuing to grow features like Stories.
However, in 2020, Facebook could incur additional expenses related to the investments in expanding data center capacity, network infrastructure, and office facilities as well as scaling headcount to support growth. This also includes investments in privacy, safety and security, marketing, video content, and long-term technology initiatives. The total costs and expenses are anticipated to be $46-48 billion in 2019 and $54-59 billion in 2020.
For the third quarter, Facebook reported a 19% growth in earnings helped by higher revenue. Daily Active Users (DAUs) increased 9% year-over-year to 1.62 billion, while Monthly Active Users (MAUs) rose 8% to $2.45 billion. Mobile advertising revenue represented about 94% of advertising revenue.
As of September 30, 2019, the company had cash and cash equivalents and marketable securities of $52.27 billion. Facebook anticipates that its available funds, credit facility, and cash flow from operations will be sufficient to meet operational cash needs for the foreseeable future. The performance outlook looks strong for the company and the stock could reflect this in the future.