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How to Trade Facebook's Stock (FB) Ahead of Earnings

On Wednesday, July 27 th , Facebook Inc. (FB) released its Q2 earnings results. The company is currently a Zacks Rank #3 (Hold) and shares are up about 15.2% year-to-date.

David looked into Facebook's past earnings, looked at what is currently going on with the company, and gave us his thoughts on their upcoming earnings announcement.

Furthermore, Dave looked into some potential options trades for investors looking to make a play on Facebook ahead of earnings. You can see his thoughts on in our video.

Facebook in Focus

Facebook Inc. operates a social networking website worldwide. The company's products for users are free of charge and available on the web, mobile web, and other mobile platforms. The Facebook Platform is a series of tools and application programming interfaces that developers can use to build social applications or integrate their websites.

Facebook is coming off of an earnings beat of 29.55% in its Q1 2016 earnings report, posting an EPS that was $0.13 higher than the Zacks Consensus Estimate.

FB has an average EPS surprise of 11.8% for the last four quarters. In Q2 2015, FB missed estimates by 3.23%. However, Facebook went on to beat estimates in Q3 and Q4 2015 by 2.86% and 18% respectively.

FACEBOOK INC-A Price, Consensus and EPS Surprise

FACEBOOK INC-A Price, Consensus and EPS Surprise | FACEBOOK INC-A Quote

Heading into this earnings report, our Most Accurate Estimate for Facebook is $0.62, the same as the Zacks Consensus Estimate.

Facebook has continued its storied growth in Q2, with its messenger app notably hitting the 1 billion monthly user milestone on July 20 th . Up until this point, messenger was not a source of revenue for Facebook, as CEO Mark Zuckerberg had previously stated that he would wait until this milestone to explore profitability options with the service.

Facebook also recently announced its first successful test of Aquila, the company's high altitude solar-powered aircraft. Aquila is part of Facebook's plan to beam internet to people in remote locations through use of laser communication and millimeter wave systems.

A still-growing core user base along with Instagram's new ad program, a 1 billion user strong messenger, well-performing WhatsApp and continued innovation paints a picture of a Facebook that still has plenty of growth ahead. These factors, coupled with a lack of earnings estimate revisions in the last 60 days reflect analyst confidence in Facebook's Q2 earnings report, as well as moving forward.

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Dave Bartosiak is the editor of the Momentum Trader and Home Run Investor service. He has over a decade of experience in the financial services industry. He has traded forex, futures, stocks, and options. Mr. Bartosiak is a frequent guest on popular business news TV channels such as Bloomberg TV. He's also the host of a light-hearted, Millennial-minded series of videos called "Trending Stocks."

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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