Please ensure Javascript is enabled for purposes of website accessibility

Why Facebook Stock Jumped 27.2% in January

By Keith Noonan – Updated Apr 11, 2019 at 4:08PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Strong earnings results helped the social media giant break out of its slump.

What happened

Shares of Facebook (META -0.54%) gained 27.2% in January, according to data from S&P Global Market Intelligence. The stock soared after the company published fourth-quarter earnings that delivered sales and earnings performance that came in well ahead of the market's expectations. 

FB Chart

FB data by YCharts.

Facebook published its earnings results after market close on Jan. 30, with sales for the period climbing 30% year over year to reach $16.9 billion and earnings per share up 65% to reach $2.38 -- thanks in part to a substantially lower tax rate and the company's stock buybacks. After a string of mixed quarterly reports and controversies, that was exactly the kind of blockbuster performance investors were looking for, and shares soared following the release.

A person holding a mobile phone surrounded by thumbs-up icons.

Image source: Getty Images.

So what

Investors had become less optimistic about Facebook's outlook on the heels of decelerating growth and a series of user privacy and data mining scandals, but the strong fourth-quarter results did a lot to restore excitement surrounding the company. Monthly active users and daily active users both climbed 9% compared to the prior-year period, and average revenue per user increased, helping to allay concerns about whether users on the company's core social media site were starting to lose interest in the platform. 

Check out the latest Facebook earnings call transcript.

Now what

The company estimates that some 2.7 billion people use Facebook, Instagram, Messenger, and WhatsApp on a monthly basis and more than 2 billion people use at least one of its services daily. Advertising business is migrating from Facebook to Instagram, but that transition appears to be going smoothly, and the company continues to explore opportunities in messaging and the payment services outside of its core platforms. The company's big push into video and the performance of its IGTV and Watch apps are worth keeping an eye on as well -- and could give it new avenues for generating online ad sales, help alleviate ad saturation issues, and strengthen the company's overall social ecosystem.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
META
$135.68 (-0.54%) $0.73

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
104%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.