Please ensure Javascript is enabled for purposes of website accessibility

Why Facebook Stock Jumped Today

By Joe Tenebruso – Updated Oct 12, 2020 at 4:26PM

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

A recovering online ad market bodes well for the social media giant.

What happened

Shares of Facebook (META -1.45%) climbed 4.3% on Monday, following bullish analyst remarks.  

So what

Deutsche Bank analyst Lloyd Walmsley reiterated his buy rating on Facebook's stock and boosted his price forecast from $305 to $325. His new target represents potential gains for investors of roughly 18% from Monday's closing price of $275.75.

A person is pointing to a chart that rises, then falls, then rises again.

Analysts say a recovery in the digital ad market could drive Facebook's stock to new highs. Image source: Getty Images.

Walmsley believes a recovery in the online advertising market is underway, one that he expects to accelerate into the fourth quarter. In turn, he sees Facebook's revenue growth accelerating and its profit margins strengthening in the year ahead.

Moreover, as a large-cap stock, Walmsley argues that Facebook offers investors a more attractive risk-to-reward profile than its smaller competitors. 

Now what 

Despite the serious challenges Facebook faces in fighting hate speech and misinformation on its social media platforms, the ad titan remains well positioned to profit from the long-term growth of the digital advertising industry.

Digital ad sales are forecast to top $517 billion by 2023, up from $333 billion in 2019, according to eMarketer. That leaves plenty of room for expansion for Facebook, which grew revenue by 11% year over year to $18.7 billion in the second quarter. 

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Joe Tenebruso 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.
$134.40 (-1.45%) $-1.97

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

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.