A WISE, AVID and experienced market junkie once said: “The past isn’t as good as you remember, the present is not as bad as you think, and the future will be better than you anticipate”.
This is so true when we think about how the current US earnings cycle has taken the spotlight away from the Evergrande debacle in China.
With Brent crude flying higher and the inflationary spin-offs this rise causes, the global supply chain squeeze and the central bank “money taps” which might possibly be tightened later this year, the future is full of opportunities for the informed investor.
In the US, listed companies need to give feedback to investors on a quarterly basis on earnings, revenue, announcements and net sales – a process which takes about six weeks each cycle.
Leading up to the announcement, various analysts from big financial institutions write reports and publish their analysis and estimates of companies which indicate how well or bad they expect the company’s results to be.
With the US earnings season in full swing – we have seen around 109 companies of the S&P 500 report so far, a number of shares have attracted a lot of attention.
One of these is Facebook, which releases its results today after market close – around 10pm South African time.
Many market participants are also eagerly awaiting the speculated rebrand, which will be announced post earnings.
The main reason behind the proposed rebrand was born out of necessity to create better PR for the social media behemoth. We are sure you remember the “great trek” to Telegram earlier this year, among a litany of other mistakes over the last few years.
With documents leaked by whistle-blowers revealing several alleged questionable and unethical behaviours perpetuated by Facebook in search of profits causing the largest sell-off this year – followed by a strong rebound, investors and traders alike have had ample opportunities for profit taking.
Facebook seems to be taking a leaf from Alphabet (Google’s holding company) book to fend off increased regulatory scrutiny which would help to avoid a break-up of their companies (the WhatsApp and Instagram businesses) from its core Facebook application.
Mark Zuckerberg is also looking to propel Facebook as the vanguard into the “Metaverse” – basically it is his ambition for Facebook to eventually be known better for its involvement in the metaverse, the next evolution in online connectivity with people living, working and interacting in an immersive virtual world.
Reminds one of the movie Ready Player One, the sci-fi movie which came out in 2018.
Facebook deals with more than 10 million advertisers and boasts 2.8 billion monthly active users, approximately 36 percent of the world’s estimated population.
From 2016 to 2021 their revenue grew 34.4 times.
Average analyst targets from Bloomberg have a target of $418.30 (R6 195) at the time of writing this, which suggests a target of 23 percent is still in the price and we would suggest a buy.
The firm’s current earnings estimate for earnings per share is $3.67 (R54.35), with a revenue estimate at $29.456 billion
Technical analysts saw a strong reversal after it came close to its 200 day moving average, backed by very strong momentum.
We look forward to tonight and the release of the results.
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