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Strong Earnings Results Pushes Facebook to New All-time Highs

David Becker
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Strong Earnings Results Pushes Facebook to New All-time Highs

Despite calls from Fed Chair Janet Yellen that social media stock had values that could be considered overstretched, Facebook (NASDAQ:FB) knocked the cover off the ball on Wednesday while reporting second quarter earnings. The social media giant beat on both the top and bottom line and its stock price shot up in afterhours trading reflecting its strong quarterly financial performance.

The question for investors now is can the stock surpass $80. Facebook beat earnings with $2.91 billion and EPS of $0.42 per share, compared to estimates of $2.81 billion and EPS estimates of $0.32. Facebook posted robust ad revenue for the second quarter. Ad revenue increased 67% Y/Y to $2.68 billion, with mobile ad sales making up 62% of ad revenue. Payments revenue also rose 9% Y/Y to $234M.

Facebook said they will make efforts to accept more payments on its platform, following a question about Facebook’s Buy button and related payments tools. Sheryl Sandberg noted that the acquisition of video ad tech platform LiveRail will further Facebook’s ad network ambitions; the company just recently launched its mobile ad network. She also declares marketers are getting more creative with Facebook campaigns, comparing them to TV campaigns in the process.

Facebook will gap higher on the open as it is currently trading at 76 in the after hours market, up more than 5%. The new all-time high is a very bullish sign for the stock price. Momentum on the stock has turned positive as the MACD (moving average convergence divergence) index generated a buy signal.

This occurs when the spread (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal.

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