Financial Advisors Are Paying More Attention to Facebook as Stock Inches Lower Despite Strong Fundamentals
The US stock market had an interesting week between November 27 and December 1. The S&P 500 and Dow Jones Industrial Average indexes gained 1.53% and 2.86%, respectively, as retailers registered a strong run following solid Black Friday figures. Dow Jones Industrial Average also passed the 24,000-point mark on Thursday, boosted by optimism about the tax reform, which was passed by the Senate early on Saturday morning. On the other hand, tech stocks saw declines on Wednesday, with so-called FAANG stocks losing ground, despite strong fundamentals and great performance so far this year. The Nasdaq Composite index inched down by 0.6% last week, mainly on the back of a 1.27% drop on Wednesday. All three indexes also had a dip on Friday intraday trading on the back of ABC News reporting that former US national security adviser Michael Flynn was prepared to testify that then-candidate Donald Trump asked Flynn to contact Russians. Later that same day, ABC News walked back their report and suspended reporter Brian Ross. The stocks mostly recovered after the retraction.
Track Star, InvestingChannel’s official newsletter capturing and analyzing the trends of Financial Advisors, has compiled its weekly list of the 20 most searched tickers among Financial Advisors. By looking at the lists over the past four weeks some interesting trends can be observed. Only seven stocks that ranked as the most searched tickers between November 26 and December 2 were on the list four weeks ago. However, in the last three weeks, Financial Advisors’ focus has been staying mostly on the same stocks, with just two stocks in last week’s top 20 list being newcomers (in the last three weeks). Moreover, in the last three weeks, the top four stocks have been the same, NVIDIA Corporation (NASDAQ:NVDA), which has been the most searched ticker for three weeks in a row, followed by Equifax Inc. (NYSE:EFX), ITUS Corp (NASDAQ:ITUS), and WPCS International Incorporated (NASDAQ:WPCS), which have ranked on the other three spots, but swapped places among themselves.
At the same time, one stock that gained the most popularity among Financial Advisors in the last three weeks is Facebook Inc (NASDAQ:FB), which was the fifth most searched ticker last week, but had ranked on the eighth and 10th spot, respectively, in the previous two weeks. Facebook Inc (NASDAQ:FB)’s stock lost 4.2% between November 27 and December 1, as it didn’t recover from the Wednesday dip and it declined by 2% during November, as the drop in the last days of the month canceled the small gains registered throughout the month.
The decline registered by Facebook Inc (NASDAQ:FB) alongside its other FAANG peers, Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc (NASDAQ:AAPL), Netflix Inc (NASDAQ:NFLX) and Google owner Alphabet Inc (NASDAQ:GOOGL), caused some analysts to express concerns that investors might be rotating these stocks and switching to companies that can benefit the most from the tax reform: banks, which have another positive development represented by Jerome Powell, who was picked by President Trump to head the Federal Reserve after Chair Janet Yellen’s term ends in February. Last Tuesday, Powell appeared before the Senate banking panel for his confirmation hearing. Powell in his opening statement promised to resist political pressure and during the hearing said that he would continue the policy of gradual interest rate hikes.
Nevertheless, Facebook Inc (NASDAQ:FB)’s stock has advanced by nearly 50% since the beginning of the year, so the recent decline is barely a dent in its performance.
The performance of Facebook Inc (NASDAQ:FB)’s stock comes on back of excellent financial results, which not only surpassed expectations, but also showed strong revenue growth, which exceeded 50% on the year in most of the last eight quarters. The stock is expected to continue its upward movement. Last week, JPMorgan analyst Doug Anmuth shares his top internet stock ideas, which included Facebook. The analyst believes that fundamentals in the advertising space will remain strong next year and he set a December 2018 price target of $225 on the stock, according to CNBC. “We are positive on FB into 2018 … We believe valuation of Facebook shares is compelling at ~21x our 2019 GAAP EPS,” Anmuth wrote. He added that Facebook can grow its Instagram platform to 800 million monthly users and monetize it. JPMorgan is not only bullish on Facebook Inc (NASDAQ:FB)’s social media business, but is also keeping an eye on the company’s strides in the artificial intelligence space, with the firm’s analyst Stacy Pollard naming Facebook as one of the top AI stock ideas.