Over the last few days fluctuation in the stock of Facebook, Inc. (NASDAQ:FB) was the main talking point of investors. It is widely believed that a stock’s future performance can best be predicted by analyzing prior trends and patterns in price. In the case of FB, the chart has some interesting things to say about where the stock might be headed in the future.How has the stock performed recently?
Facebook, Inc. (NASDAQ:FB) has been trading in a bullish manner, based on the relative positions of the stock’s 20 and 200 day moving averages. In the last month, the price of FB has decreased -1.65%. Shares are now up over the past year, outperforming the broad market by -100% and outperformed a peer group of similar companies by 9%. After the latest session, which saw the stock close at a price of $176.41, FB sits below its 52-week high.Momentum indicators
Of course, these surface-level price movements don’t tell us much about the direction that FB may be headed in the future. To forecast a stock’s future performance, analysts use momentum indicators, which take into account the size and speed of these price movements. As momentum begins to slow, it may be a sign that a recent trend is about to reverse. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for FB is 44.93%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 21.65%, tells a different story, and suggests that FB currently trades in oversold territory.What do the trading volumes reveal?
Analysts use volume trends to assess the level of conviction behind a stock’s price changes. When volumes suddenly increase above normal levels, it can be a sign that investors feel very strongly in one way or the other about the future direction of a stock, or may even have access to inside information. Facebook, Inc. (FB) average trading volume of 29,746,535 during the past month is 63.03% above its average volume over the past year, indicating that investors have been more active than usual in the stock in recent times.
FB is currently undervalued by -20.82% relative to the average 1-year price target of $222.81 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 1.80, which implies that analysts are generally bullish in their outlook for FB over the next year.How risky is the stock?
When predicting the future performance for a stock, it’s also important to take into account risk. To do this, analysts often use a stock’s beta, which measures the stock’s volatility relative to the overall market.
Facebook, Inc. (NASDAQ:FB) has a beta of 0.71, compared to a beta of 1 for the market, which implies that the stock’s price movements are less extreme than the market as a whole. FB therefore has an below average level of market risk. During the past couple of weeks, FB average daily volatility was 39.10%, which is -14.34 percentage points higher than the average volatility over the past 100 days.