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Will Facebook’s Earnings Report Support Its Trillion-Dollar Valuation?

With Facebook stock trading at a record high and with a valuation now above $1 trillion, the social media giant reports second-quarter earnings late Wednesday.




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Wall Street looks for Facebook (FB) to report adjusted earnings of $3.04 a share, up 69% from the year-ago period, on revenue of $27.8 billion, up 49%.

The Facebook earnings report follows that of Snap (SNAP) and Twitter (TWTR) last week. Like Facebook, the two derive almost all their revenue from advertising. Snap and Twitter both exceeded estimates as advertising revenue came in better than expected. The same is true of Google owner Alphabet (GOOGL), which reported second-quarter earnings late Tuesday.

“Our view for 2021 was that a global economic recovery would create more demand for digital advertisements,” KeyBanc Capital Markets analyst Justin Patterson said in a note to clients. “In short, this is a very strong ad market.”

Patterson added that should prove particularly strong for Facebook. He has an overweight rating on Facebook stock and price target of 414.

Facebook Stock Action

Facebook stock, which recently topped $1 trillion in market valuation, moved up 1.3%, near 372.67, during morning trading on the stock market today. It hit a new intraday high of 377.55. Facebook stock is currently extended and out of buy range. It is on the IBD Leaderboard list of top-performing stocks.

This year, Facebook has launched new initiatives to expand advertising across more parts of its platform. This includes efforts to drive increased user engagement and increased e-commerce efforts.

“Despite some expected headwinds this year, including growing antitrust battles, we anticipate Facebook will benefit from improved ad spending and capitalize on accelerated digital transformation with new initiatives,” Brian White, analyst at Monness Crespi Hardt, said in a note to clients. His price target on Facebook stock is 460, with a buy rating.

Facebook, Amazon (AMZN), Apple (AAPL) and Alphabet are under pressure from Washington lawmakers that want to reduce the dominance of Big Tech amid concerns of monopoly power.

The crackdown comes at the same time a massive new digital wave may be on the way for tech stocks.

Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.

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