Shares of Facebook, Inc. (FB) rose more than 4% in early trading on Wednesday after the social media giant reported third quarter financial results after the closing bell on Tuesday. Revenue rose 32.9% to $13.73 billion, missing consensus estimates by $40 million, but net income of $1.76 per share beat consensus estimates by 30 cents per share. While Facebook shares initially dipped lower in post-market trading, they rose sharply on Wednesday morning.
Analysts have mixed opinions following the financial results. BMO Capital lowered its price target on Facebook shares from $190.00 to $175.00, saying that expense growth guidance cut into its earnings outlook for next year. On the other end of the spectrum, Rosenblatt Securities believes that Facebook has "found the bottom" and that the guidance for next year significantly reduces the worries surrounding the stock. Analysts at the Wall Street firm initiated coverage on the social media giant earlier this month with a Buy rating and a price target of $213.
From a technical standpoint, Facebook stock broke down from S2 support at $150.71 earlier this month before rebounding above those levels during Wednesday's session. The relative strength index (RSI) rose to neutral levels of 46.22, while the moving average convergence divergence (MACD) could see a bullish crossover in the near term, signaling a trend reversal.
Traders should watch for a breakout from trendline resistance at around $155.00 on meaningful volume, but a breakout from the 50-day moving average at $161.48 would be a more telling sign of a long-term trend change. If the stock doesn't break through those levels, traders could watch for a move lower to retest prior lows at around $140.00 before a renewed push higher.
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.