Tech Stocks This Week: Facebook Surpasses $200, Red Hat Sinks, and More
So much for Facebook (NASDAQ: FB) stock's sell-off earlier this year sticking around. Shares of the social-network company have surged 26% since the beginning of April, reaching new highs and surpassing $200 for the first time this week. Meanwhile, investors punished security and software services company BlackBerry (NYSE: BB) and open-source software vendor Red Hat (NYSE: RHT) this week.
Here's what investors should know about these three top stories in tech.
Facebook's new features impress
Facebook is trading at about $202 at the time of this writing, and bullishness toward the company's stock comes as data privacy concerns fade away as the company demonstrates more ways to monetize its platform.
Image source: Getty Images.
Facebook introduced several new impressive features this week, including a subscription option for Facebook Group administrators and autoplay video ads within Facebook Messenger. But perhaps the one feature that could evolve into the biggest catalyst for Facebook is the company's new long-form video platform on Instagram, called IGTV. The platform's immersive mobile content better positions Facebook to vie for high-dollar TV advertising budgets.
While Facebook didn't demonstrate any ad products for IGTV, Instagram CEO Kevin Systrom said the platform could eventually debut ads. Investors almost certainly can count on ads, since Facebook will need to offer monetization strategies to creators in order to entice them to regularly create content on the platform.
By combining this new feature with Facebook's resources and Instagram's 1 billion monthly active users, IGTV represents the social network's best chance at competing more directly with Alphabet's YouTube.
Facebook stock ended the week up nearly 2%, despite the S&P 500's 0.5% decline during the week.
BlackBerry's outlook for software and services revenue disappoints
As BlackBerry continues to transform into a software and services company, its enterprise software and services segment has been on a roll recently.
Software and services revenue in BlackBerry's just-reported fiscal first quarter was up 14% year over year on a non-GAAP basis and 18% year over year on a GAAP basis. This momentum in software services was "driven by strong double-digit billings and an increase in recurring revenue," said BlackBerry CEO John Chen in the company's fiscal 2019 first-quarter earnings call.
But investors may be concerned about management's outlook for software and services revenue to increase by just 8% to 10% year over year in fiscal 2019. This guidance, which marks a notable deceleration in the key metric, reflects the company's decision to stop selling its software and services on a licensing basis. Instead, BlackBerry will attempt to sell customers its software and services on a subscription basis.
BlackBerry stock is down about 8.7% on Friday at the time of this writing. For the whole week, BlackBerry stock fell nearly 13%.
Red Hat falls despite better-than-expected results
Perhaps the most interesting story in tech this week came from open-source software vendor Red Hat. The sub-$2 billion company suffered a pullback when it posted its fiscal first-quarter results.
The stock's decline comes despite Red Hat reporting impressive non-GAAP earnings per share of $0.72 on revenue of $814 million. The two figures were up 24% and 20%, respectively, from the year-ago quarter. Further, both key metrics easily beat consensus analyst estimates for non-GAAP earnings per share of $0.69 and revenue of about $808 million.
"We again delivered strong revenue growth in Q1 as customers continued to adopt our cloud enabling technologies for their applications," said Red Hat CEO Jim Whitehurst in a press release about the quarter.
Despite the solid results, investors may be fretting over the worse-than-expected fiscal second-quarter earnings and revenue guidance.
Red Hat finished the week down about 19%, but the stock is up 18% year to date and 44% in the past 12 months.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Facebook. The Motley Fool has a disclosure policy.
