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Facebook, Inc. (FB)

Facebook stock forecast: buy or sell

Close on Oct 23rd, 2020
$284.79 +2.40%
3 months performance
21.40%
Published: October 24th, 2020 - 4.50pm EDT

Facebook stock outlook

  • Facebook closed yesterday at $284.79 after climbing a 2.4%.
  • Facebook is presenting its earnings report on Thursday next week
  • The price is currently above the upper Bollinger band, which often indicates a short-term correction
  • Price is drawing a scaled uptrend since last March with higher tops and higher bottoms. This rally marked a 107.72% gain
  • Credit Suisse Group and Jefferies Financial Group published strong positive ratings for Facebook on Tuesday, with an average target of $321.00
  • Facebook, Inc. develops products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and in-home devices worldwide.

Important note:
The opinions given in this post are personal and not recommendations for you to buy or sell stocks. The author of this paper does not know the specific scenarios of the reader, his or her own finances or what is in his or her best interest at any given time. All users should speak with their financial advisor before buying or selling any securities Thoughts are posted for general educational motives only

Facebook stock charts

Should I buy Facebook stock?

Even if you are a experienced or a novel trader, best trading results come from using an investing strategy that never leaves to random or subjective opinions when is the best moment to buy or sell stocks. Trading strategies are meant for helping you in the decision process of what stocks to pick and when is the best moment to buy them. At Stocks2.com, we like to use very simple but trusted and powerful trend following trading strategies. Simple things usually work the best

Is $FB stock a buy?

Currently, Facebook stock matches one trading strategy:

Uptrend buy setup

Facebook stock continues to trend higher since last March and has marked a gorgeous 107.72% gain. Price marked a local bottom in this uptrend at $244.13 in mid-September, and since then it bounced up a 16.66%. Breaking out above $304.67 - it's last top - will be a good entry point if Facebook resumes the uptrend. If you decide to enter this trade, the suggested stop loss is at $274.20

Buy setupBuy pointStop lossRisk
Uptrend buy setup$304.67$274.2010%

Should I sell Facebook stock?

When you own a stock with some profit, it's really difficult to decide the good moment to sell and get your benefits. Trading strategies give us the ability us to avoid impetuous decisions based on our sentiments or the buzz that surrounds the market. Our trading system selects very simple setups to guide us on when is a good moment to sell a stock. Be aware that these setups are not intended for shorting Facebook stock

As a golden rule, you should never keep an operation that generates greater losses than those expected by the time of purchase. When to sell shares should always be dictated by the stop-loss (automatic or manual)

Is it time to sell Facebook stock?

Currently, Facebook stock doesn't match any of our preferred sell setups, so if you hold Facebook stock and your operation is in profit probably is not time to sell now

Analysts' recommendations to buy or sell Facebook stock

Brokerage firms and financial institutions post stock ratings based on their views of the market and the fundamental and technical situation of the analyzed stock. Unfortunately, the accuracy of these predictions is not very high, and certainly not a direct buy or sell signal

In the last month, 4 ratings were published for Facebook. General sentiment is bullish, with 4 out of 4 publishing optimistic forecasts

Facebook ratings

Brokerage firmRating
Sep 29th, 2020
Moffett Nathanson Strong buy
Oct 12th, 2020
Deutsche Bank Aktiengesellschaft Strong buy
Oct 20th, 2020
Credit Suisse Group NeutralStrong buy
Oct 20th, 2020
Jefferies Financial Group Strong buy

Technical analysis

Since last March, Facebook has been printing an uptrend that by now marked a gorgeous 107.72%. The price line shows higher peaks and higher lows, and along the way gave some buying opportunities for those who wanted to enter. Latest low was in mid-September, when price bounced at $244.13. Currently, it swings in a consolidation between its last top ($304.67) and its last bottom ($244.13)

SMAs overview

A favorite tool of many technical analysts are the moving averages, that easily show market momentum. A moving average is calculated as the simple mean of the previous N periods (usually sessions). Usual time periods used for moving averages are 21 days, 50 days, 100 days and 200 days. Further about Moving Averages from sources like Wikipedia and Investopedia

FB SMAs chart

Supports and resistances

Traders use support and resistance levels to find price points in the stock price action that tend to act as glass ceiling, containing the price of shares to move up or down. Supports are levels where the price may stop as it falls. Price is more likely to "rebound" this level rather than break through it. However, if the price breaks down the support, it will probably continue falling until meeting another support level. On the other hand, resistances are where the price tends to find a curb as it moves up. Likewise, the price is more liable to "rebound" at this level, and if it finally breaches this level, it will rise easily until it hits the next resistance

The current resistances are:

  • R1: $304.67 (6.98% above)
  • The current support levels are:

  • S1: $250.15 (-12.16% below)
  • S2: $245.19 (-13.9% below)
  • S3: $244.13 (-14.28% below)
  • Bollinger bands

    This is an indicator that was developed in the 1980s by John Bollinger. It is composed of 3 bands that are drawn superimposed on the price evolution chart:

    • The central band is a moving average, usually a simple moving average calculated with 20 periods
    • The upper band is calculated by adding to the value of the simple moving average 2 times the standard deviation of the moving average
    • The lower band is calculated by subtracting from the simple moving average 2 times the standard deviation of the moving average

    When the price moves out of the band (above the upper line or below the lower line) it means that the stock is currently maintaining a very strong momentum and therefore can reverse the trend to the average. For this case, the price is above the upper band, which should mean a possible short-term corrective movement (at least) until it is below the band

    FB RSI chart

    Relative strength index

    The relative strength index (RSI) is a technical indicator used in the analysis of financial markets. Its objective is to plot the current and previous strength or weakness of a stock or market based on the closing prices of a recent trading period. Like other oscillation indicators, the RSI moves in a range from 0 to 100. The relative strength indicator is one of the best known and most widely used indicators, and it was invented by J. Welles Wilder in 1978

    The RSI dropped below the overbought level of 70 in early September after just crossing to the overbough zone for 1 day (weak signal). The RSI value yesterday was 63.45. Since RSI lost the overbought zone, Facebook stock collapsed a 5.85%

    FB RSI chart

    Earnings and financials

    Facebook ($FB) is posting earnings report on Thursday next week. Wall Street predicts an earnings a share of $1.89, compared to previous quarter that made $1.80.

    In late July, Facebook ($FB) hosted the quarterly investors call and released the fiscal 2nd-quarter report. The company posted EPS that strongly uplifted Market expectations. Quarterly EPS was $1.80 per share vs the estimates of $1.39.

    Same quarter one year ago, reported EPS was $0.91, so current EPS is an increase of 97.8%.
    FB revenues and profits chart