Facebook (FB) Trading Higher After Strong Quarter
Facebook, Inc. (FB) is trading higher by nearly 2% in Thursday’s pre-market after beating fourth quarter 2020 top- and bottom-line estimates. The social media giant earned $3.88 per share in the quarter, $0.64 better than expectations, while revenue rose 33.2% year over year to $28.1 billion, higher than the $26.4 billion consensus. CEO Mark Zuckerberg reaffirmed 2021 expense and capital expenditure (capex) projections while expecting revenue to “remain stable or modestly accelerate sequentially in Q1 and Q2.”
Key Takeaways
- Facebook beat fourth quarter earnings and revenue estimates.
- Political headwinds are finally dissipating, allowing fundamentals to control price action.
- Two-sided price action is likely into March, but the stock could break out later this year.
Daily Active Users (DAUs) rose 11% year over year to 1.84 billion, while Monthly Active Users (MAUs) grew 12% to 2.80 billion. The company just authorized an additional $25 billion in share buybacks, adding a tailwind at the same time that political headwinds are receding following the transition to the Biden administration. The company also said that it will no longer recommend civic or political groups and is working to reduce the amount of political content.
The push to repeal Section 230 liability protections for social media lost steam when Donald Trump left office, still reeling from Facebook and Twitter, Inc. (TWTR) bans that cut off his main sources of communication to followers. Democrats are unlikely to press for reforms given those actions, setting the stage for a period in which ad revenues guide price action rather than threats or intimidation. In turn, this could clear the pathway to new highs.
Wall Street consensus on Facebook stock held firm through the election and violent aftermath, with a “Buy” rating based upon 39 “Buy,” 3 “Overweight,” 6 “Hold,” and 1 “Sell” recommendation. Price targets currently range from a low of $205 to a Street-high $397, while the stock is set to open Thursday’s session around $70 below the median $345 target. This humble placement adds another tailwind that raises the odds for sustained upside.
Tip
Capital expenditures (capex) are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. Capex is often used to undertake new projects or investments by a company. Making capital expenditures on fixed assets can include repairing a roof, purchasing a piece of equipment, or building a new factory. This type of financial outlay is made by companies to increase the scope or add some economic benefit to their operations.
Facebook Weekly Chart (2012 – 2021)
TradingView.com
The stock came public in the low $40s in 2012 and entered an uptrend 14 months later, stalling in the low $70s in March 2014. Price action then eased into a narrow rising channel and traded within those boundaries into July 2018, when it topped out at $219 and broke channel support, dropping to a two-year low. A slow-motion uptick returned to the prior high in January 2020, yielding a quick rally, followed by a failed breakout and 87-point decline into March.
A strong recovery wave reached the first quarter peak in May, setting off an immediate breakout, but momentum didn’t kick in until August, when the stock took off in a vertical impulse that posted an all-time high at $304.67 a few weeks later. Price action since that time has eased into a bearish descending triangle that suggests much lower prices, but that will change if the stock can rally above resistance at $290.
The weekly stochastic oscillator has entered a buy cycle that predicts relative strength into March, but the monthly oscillator remains in an active sell cycle, with the conflict likely to generate two-sided price action. That makes sense, with price embedded around the midpoint of the five-month trading range. Despite the conflict, it looks like the stars are slowly aligning for a breakout that rewards patient shareholders.
Tip
A descending triangle is a bearish chart pattern used in technical analysis that is created by drawing one trendline that connects a series of lower highs and a second horizontal trendline that connects a series of lows. Oftentimes, traders watch for a move below the lower support trendline because it suggests that the downward momentum is building and a breakdown is imminent. Once the breakdown occurs, traders enter into short positions and aggressively help push the price of the asset even lower.
The Bottom Line
Facebook has added a few points after posting exceptionally strong fourth quarter profits and revenue.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.
Today, we are releasing Facebook Graph API v18.0 and Marketing API v18.0. As part of this release, we are highlighting changes below that we believe are relevant to parts of our developer community. These changes include announcements, product updates, and notifications on deprecations that we believe are relevant to your application(s)’ integration with our platform.
For a complete list of all changes and their details, please visit our changelog.
General Updates
Consolidation of Audience Location Status Options for Location Targeting
As previously announced in May 2023, we have consolidated Audience Location Status to our current default option of “People living in or recently in this location” when choosing the type of audience to reach within their Location Targeting selections. This update reflects a consolidation of other previously available options and removal of our “People traveling in this location” option.
We are making this change as part of our ongoing efforts to deliver more value to businesses, simplify our ads system, and streamline our targeting options in order to increase performance efficiency and remove options that have low usage.
This update will apply to new or duplicated campaigns. Existing campaigns created prior to launch will not be entered in this new experience unless they are in draft mode or duplicated.
Add “add_security_recommendation” and “code_expiration_minutes” to WA Message Templates API
Earlier this year, we released WhatsApp’s authentication solution which enabled creating and sending authentication templates with native buttons and preset authentication messages. With the release of Graph API v18, we’re making improvements to the retrieval of authentication templates, making the end-to-end authentication template process easier for BSPs and businesses.
With Graph API v18, BSPs and businesses can have better visibility into preset authentication message template content after creation. Specifically, payloads will return preset content configuration options, in addition to the text used by WhatsApp. This improvement can enable BSPs and businesses to build “edit” UIs for authentication templates that can be constructed on top of the API.
Note that errors may occur when upgrading to Graph API v18 if BSPs or businesses are taking the entire response from the GET request and providing it back to the POST request to update templates. To resolve, the body/header/footer text fields should be dropped before passing back into the API.
Re-launching dev docs and changelogs for creating Call Ads
- Facebook Reels Placement for Call Ads
Meta is releasing the ability to deliver Call Ads through the Facebook Reels platform. Call ads allow users to call businesses in the moment of consideration when they view an ad, and help businesses drive more complex discussions with interested users. This is an opportunity for businesses to advertise with call ads based on peoples’ real-time behavior on Facebook. Under the Ad set Level within Ads Manager, businesses can choose to add “Facebook Reels” Under the Placements section. - Re-Launching Call Ads via API
On September 12, 2023, we’re providing updated guidance on how to create Call Ads via the API. We are introducing documentation solely for Call Ads, so that 3P developers can more easily create Call Ads’ campaigns and know how to view insights about their ongoing call ad campaigns, including call-related metrics. In the future, we also plan to support Call Add-ons via our API platform. Developers should have access to the general permissions necessary to create general ads in order to create Call Ads via the API platform.Please refer to developer documentation for additional information.
Deprecations & Breaking Changes
Graph API changes for user granular permission feature
We are updating two graph API endpoints for WhatsAppBusinessAccount. These endpoints are as follows:
- Retrieve message templates associated with WhatsAppBusiness Account
- Retrieve phone numbers associated with WhatsAppBusiness Account
With v18, we are rolling out a new feature “user granular permission”. All existing users who are already added to WhatsAppBusinessAccount will be backfilled and will continue to have access (no impact).
The admin has the flexibility to change these permissions. If the admin changes the permission and removes access to view message templates or phone numbers for one of their users, that specific user will start getting an error message saying you do not have permission to view message templates or phone numbers on all versions v18 and older.
Deprecate legacy metrics naming for IG Media and User Insights
Starting on September 12, Instagram will remove duplicative and legacy, insights metrics from the Instagram Graph API in order to share a single source of metrics to our developers.
This new upgrade reduces any confusion as well as increases the reliability and quality of our reporting.
After 90 days of this launch (i.e. December 11, 2023), we will remove all these duplicative and legacy insights metrics from the Instagram Graph API on all versions in order to be more consistent with the Instagram app.
We appreciate all the feedback that we’ve received from our developer community, and look forward to continuing to work together.
Please review the media insights and user insights developer documentation to learn more.
Deprecate all Facebook Wi-Fi v1 and Facebook Wi-Fi v2 endpoints
Facebook Wi-Fi was designed to improve the experience of connecting to Wi-Fi hotspots at businesses. It allowed a merchant’s customers to get free Wi-Fi simply by checking in on Facebook. It also allowed merchants to control who could use their Wi-Fi and for how long, and integrated with ads to enable targeting to customers who had used the merchant’s Wi-Fi. This product was deprecated on June 12, 2023. As the partner notice period has ended, all endpoints used by Facebook Wi-Fi v1 and Facebook Wi-Fi v2 have been deprecated and removed.
API Version Deprecations:
As part of Facebook’s versioning schedule for Graph API and Marketing API, please note the upcoming deprecations:
Graph API
- September 14, 2023: Graph API v11.0 will be deprecated and removed from the platform
- February 8, 2024: Graph API v12.0 will be deprecated and removed from the platform
- May 28, 2024: Graph API v13.0 will be deprecated and removed from the platform
Marketing API
- September 20, 2023: Marketing API v14.0 will be deprecated and removed from the platform
- September 20, 2023: Marketing API v15.0 will be deprecated and removed from the platform
- February 06, 2024: Marketing API v16.0 will be deprecated and removed from the platform
To avoid disruption to your business, we recommend migrating all calls to the latest API version that launched today.
Facebook Platform SDK
As part of our 2-year deprecation schedule for Platform SDKs, please note the upcoming deprecations and sunsets:
- October 2023: Facebook Platform SDK v11.0 or below will be sunset
- February 2024: Facebook Platform SDK v12.0 or below will be sunset
First seen at developers.facebook.com
Before today (August 28, 2023), advertisers could not promote images and/or videos used in Instagram Stories as ads via the Instagram Marketing API. This process created unwanted friction for our partners and their customers.
After consistently hearing about this pain point from our developer community, we have removed this unwanted friction for advertisers and now allow users to seamlessly promote their image and/or video media used in Instagram Stories as ads via the Instagram Marketing API as of August 28, 2023.
We appreciate all the feedback received from our developer community, and hope to continue improving your experience.
Please review the developer documentation to learn more.
First seen at developers.facebook.com
Launching second release of Facebook Reels API: An enterprise solution for desktop and web publishers
We’re excited to announce that the second release of FB Reels API is now publicly available for third-party developers. FB Reels API enables users of third-party platforms to share Reels directly to public Facebook Pages and the New Pages Experience.
FB Reels API has grown significantly since the first release in September 2022. The new version of the APIs now support custom thumbnails, automatic music tagging, tagging collaborators, longer format of reels and better error handling.
FB Reels API will also support scheduling and draft capability to allow creators to take advantage of tools provided either by Meta or by our partners. Based on the feedback we received from our partners, we’ll now provide additional audio insights via the Audio Recommendations API and reels performance metrics via the Insights API.
Our goal in the next couple of releases is to continue to make it easier for creators to develop quality content by adding features like early copyright detection and A/B testing. We’re also excited to start working on enhanced creation features like Video clipping- so stay tuned to hear more about those features in the future.
Call-to-Action
If you are a developer interested in integrating with the Facebook Reels API, please refer to the Developer Documents for more info.
Not sure if this product is for you? Check out our entire suite of sharing offerings.
Tune in to Product @scale event to learn more about FB Video APIs and hear from some of our customers.
First seen at developers.facebook.com
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