How High Can Facebook (FB) Stock Go?

After an impressive earnings announcement last week, shares of social media behemoth Facebook FB are hovering near all-time highs. With the stock now up over 20% on the year, many investors are beginning to wonder whether Facebook is set to absolutely blast off.

Solid Earnings Report

Last Wednesday, Facebook released its second-quarter fiscal 2016 earnings data. The company posted earnings of 76 cents per share, beating our Zacks Consensus Estimate of $0.62. Facebook also saw revenue figures of $6.436 billion, smashing our estimate of $6.008 billion.

Facebook’s key stats were also impressive. Most notably, the company continues to see strong growth in mobile advertising. Mobile advertising revenue represented 84% of total ad revenue for the quarter, which was up from 76% last year. The social media site is now seeing about 1.13 billion Daily Active Users, and a continuingly-increasing majority of these users use a mobile device to access the service.

Reaching New Highs

As mentioned before, shares of Facebook have gained 20% on the year, compared to a 10% return by the S&P 500 in that time. The stock soared to all-time highs in after-hours trading right after its earnings report.

As of the closing bell on Friday, Facebook’s 200-day moving average was $109.8. The stock closed at $123.94, which was nearly 13% higher than that average. Investors typically consider crossing the 200-day moving average a bullish signal. With Facebook now comfortably above the number, it’s clear that the stock is establishing a new range for itself.

Estimate Revisions

Following Facebook’s earnings announcement, there was a tidal wave of estimate revision activity as analysts adjusted for its impressive performance. Within the past few days, Facebook has seen seven positive estimate revisions for its current quarter, next quarter, full-year, and next-year earnings.

Currently, the Zacks Consensus Estimate for Facebook’s current-quarter sits at 76 cents per share, which is eight cents higher than it was just a week ago. If Facebook matched the Zacks Consensus Estimate this quarter, it would represent earnings growth of 110%.

Bottom Line

After a solid earnings beat followed by remarkable estimate revision activity, Facebook has shot to a Zacks Rank #1 (Strong Buy). Oftentimes smaller-cap companies are seen more frequently on the Zacks Rank #1 (Strong Buy) list, making Facebook’s appearance even more notable. In fact, Facebook currently has the largest market cap of any company on the list.

The fact that its trading near its 52-week high and pushing into new highs may have investors skeptical about how much higher Facebook can go right now, but many signs do point to its ability to keep growing. With earnings growth looking to be in the triple digits, Facebook seems poised to keep getting bigger and bigger.

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