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Why Facebook Stock Jumped on Friday

By Daniel Sparks – Jul 23, 2021 at 10:33AM

Key Points

  • The social media company's stock is getting a boost from Snap's stellar second-quarter results.
  • Facebook management guided for a likely revenue growth acceleration in Q2.
  • The tech company reports earnings next week.

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Are shares headed to $480?

What happened

Shares of social networking company Facebook (META 2.99%) popped on Friday. The stock was up more than 4% as of 10:20 a.m. EDT.

The growth stock's gain was likely driven both by better-than-expected results from social media peer Snap (SNAP 1.16%) and an upgraded 12-month price target for Facebook shares.

Facebook CEO Mark Zuckerberg presents 10-year plan at F8 conference in 2016.

Facebook CEO Mark Zuckerberg. Image source: Facebook.

So what

After market close on Thursday, Snapchat parent Snap provided an early indication of how digital advertising seems to have fared during the second quarter. The company's quarterly revenue skyrocketed 116% year over year -- a huge acceleration from the 66% growth the company saw in Q1. This suggests Facebook may also see a significant acceleration in its growth rate when the company reports its results on July 28. 

Also helping Facebook stock on Friday is an analyst's move to increase his 12-month price target for the stock from $400 to $480. Supporting his outperform rating for shares, Credit Suisse analyst Stephen Ju says his conversations with advertisers suggest strong levels of spending.

Now what

Investors will find out exactly how Facebook performed during Q2 after market close on Wednesday, when the social network reports earnings.

In the first quarter, the company's revenue increased 48% year over year. Facebook CFO David Wehner said in Facebook's first-quarter earnings release that the company expected its revenue growth rate to be at Q1's level or better in Q2. 

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. Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.

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