FB shares retreated from their latest highs just below $100/share after the company printed its earnings report for the second quarter. Although the quarterly revenue figures beat expectations, profits fell by 9% as Facebook incurred larger costs associated with its mobile ads.
Price managed to regain ground to close near $97/share after the release of the earnings report, but a bigger pullback could be underway. If so, FB shares could retrace until the next area of interest around $88/share, which is also near the 100 SMA. The short-term SMA is above the longer-term 200 SMA, indicating that the uptrend could stay intact.
Stochastic is pointing up, suggesting that buying pressure is present and that further rallies to the latest highs and beyond are possible. Meanwhile, RSI is on the way down from the overbought area, suggesting a potential return in selling momentum.
FB Shares Forecast
Facebook reported that expenses could continue to rise this year, indicating that profit margins might be lower in the next few months. However, this could also allow the company to leverage its growth in mobile advertising and possibly add more revenues later on.
“We’re investing in the next set of services and what will be future investments like Messenger, WhatsApp and Oculus,” Chief Operating Officer Sheryl Sandberg said in an interview on Wednesday after the earnings report. Facebook is also rumored to add new advertising formats to photo-sharing app Instagram, which was launched in Brazil, Germany and Japan.
With that, FB shares could be in for a bit of decline as investors wait for the recent acquisitions and new ventures to be monetized and price could surge past the $100/share barrier if these translate to stronger revenues and earnings figures down the line. The path of least resistance remains to the upside for the stock, which has been in a consistent uptrend for the past months.
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