Facebook Inc (NASDAQ:FB) saw a double-digit share price rise of over 10% in the past couple of months on the NasdaqGS. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Facebook’s outlook and value based on the most recent financial data to see if the opportunity still exists. View our latest analysis for Facebook
What is Facebook worth?The stock is currently trading at US$182.66 on the share market, which means it is overvalued by 56% compared to my intrinsic value of $116.96. Not the best news for investors looking to buy! Another thing to keep in mind is that Facebook’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from Facebook?Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profit expected to grow by 93.40% over the next couple of years, the future seems bright for Facebook. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in FB’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe FB should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on FB for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for FB, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Facebook. You can find everything you need to know about Facebook in the latest infographic research report. If you are no longer interested in Facebook, you can use our free platform to see my list of over 50 other stocks with a high growth potential.