Facebook (FB) CEO Mark Zuckerberg, hoodie and all, has it figured out or at least Wall Street thinks so. The stock has gained nearly 50% this year on expectations the company’s foray into the mobile business is paying off says Scott Nations, chief investment officer, of NationsShares “They really seem to have figured it out how to monetize mobile, something that when they first became public was really a problem, really a question mark for them.”
Analysts don’t seem to have too many questions based on third quarter expectations. Later today, look for the company to post profit growth of 60% on earnings per share of $0.40 cents, while revenue is expected to be $3.12B, up more than 50% from the year-ago period, according to estimates tracked by Yahoo Finance.
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This extreme optimism has made Facebook a big winner for investors this year even with its lofty price-to-earnings valuation of 49X and its high dependecy on mobile ads which account for the bulk of the company’s ad revenues.
However if Facebook meets its expected growth targets, Nations believes fund managers who have doubted the company, along with other tech leaders, will need to change their tune. “If you are trailing your benchmark, let’s say you are trailing the S&P, then the only way to get there between now and the end of the year is the high beta names and you mentioned a couple of prime candidates, that is Apple and Facebook.”
Apple (AAPL) and Facebook have already been a good harbinger of high-beta stocks. The PowerShares QQQ (QQQ), of which 59% is information technology stocks, has gained 12% this year double the gains of the S&P 500 (^GSPC).
Facebook will release third quarter results October 28 at 5pm ET (2pm PT).
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