Facebook stock could rise 25% from current levels and return to its previous record highs at near $220, says analyst.
Facebook stock on the rise despite the tension
InvestorPlaceMedia analyst, Josh Enomoto said that shares on the social media giant offer a ‘reassuring’ take for investors amid jittery trading in the broader markets like the 6.6% loss in S&P 500 index last month.
While most stocks appear affected by the heightened tensions between the U.S. and China, Facebook stocks proved resilient. It is now recovering losses brought by various controversies faced last year.
Facebook’s lackluster performance during the second quarter of 2018 clawed back the gains it had had after its stock price rose to record highs in late July. While doubts on its privacy security probably remain, Enomoto said that investors’ focus might have shifted.
The analyst explained that the main reason for why its stocks surge despite the gloomy market is the fact that the social media giant has no exposure to China.
China is the second biggest economy in the world, and with about 1.4 billion current population, opening its digital doors to Facebook and rivals Snap and Twitter could bring a new renaissance in social media.
Nonetheless, Enomoto said that with or without the Asian juggernaut, Facebook stocks will continue surging and could even hit new plateaus.
“Usually, a door closing indefinitely would hurt a company’s expansion prospects, but not FB stock,” he said.
Trade war helps Facebook stock
Based on trade charts, certain investments like big banks show a correlation with headlines and equity pricing. On the contrary, shares of Facebook show an inverse relationship
Facebook stock price, for instance, had risen 22% before the Q2 2018 earnings reports when the first volleys in the trade dispute began. The discussion back then was the same – a mad Trump is in discord with China counterpart.
At present, we see the same Trump acting aggressively and investors on panic. Enomoto said it’s an ‘ideal situation’ for FB stock again as it doesn’t have China exposure. Simply put, shares of the social media giant can hit $220 in almost the same circumstances as they have already proven in the past.
Facebook, he said, is even in a better position than it was in 2018 as it can now project the image that it is pro-free speech and pro-democracy.