How High Will Facebook Stock Go In 2016

How High Will Facebook Stock Go In 2016How high will Facebook stock go in 2016?  Facebook has been a breakout stock lately making people a fortune over the last few years.  But, is the world of Facebook about to come crashing down on all those that invested their hard earned money in them?  I will start out by letting everyone know that I have invested in Facebook since its IPO and still own my original shares from that purchase.  With that being said, I am actively reviewing my position and thought this would be a good chance to show everyone reading this article how an old stock broker actually reviews his current holdings and decides if he should sell that stock or hold on to it for an even longer time.  Take a look below and see the best ways to cash in on this and finally get the returns you deserve.

UPDATE 4-3-16:  If you haven’t made money with us on Friday regarding GNCA, you missed the boat.  Our readers locked in a 25% gain in one day shorting this overbought monstrosity.  Check out the article here and see what the next move is and what our plans are going forward starting tomorrow.

UPDATE 4-16-16:  Seems Facebook and Apple are competing big time for the mobile payment solution.  Facebook is rolling out the messenger payment solution for all mobile devices.  Very soon you will be seeing people with no wallets and just a phone taking care of all the bills that need to be paid.  And every time one of the billion users pays a bill, you will see Facebook take a piece of the action.  This could be billions of dollars for shareholders.  Watch this stock go to $150 in a heartbeat. 

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How high will Facebook stock go before there is a major selloff if there even is one?  Remember, markets can go years before having a major correction and Facebook already had one in the last 2 years.  I think it is easier to start an analysis like this by taking a look at the history of Facebook stock up to this point.  Notice that the first closing price of this stock was $38.23 and around 2 months later, the stock was closing at $30.97 a share.  That means that I was down around 19% in only 2 months.  Most people looked at this and said…”run as fast as you can”.  I, on the other hand, felt that there was much more movement coming, either one way or the other.


Back during the month of July 2012, I was wondering how high Facebook stock would go and I soon found out.  It did not climb at all.  It actually kept on sliding down until September 4th, 2012 when it hit it’s all-time low at $17.73 a share.  At this fantastic point, I was looking at a loss of 54% of my original investment.  I am not going to act like I wasn’t nervous at that point.  Most analysts had the fair price of this stock at between $15 to $20 dollars a share.  The problem was, that their analysis was based on conventional thinking when it came to valuing a company’s stock price.  Remember, this is Facebook we are talking about.

Facebook is absolutely a new type of company for many different reasons.  They are one of the largest companies in the world when it comes to value and yet they don’t even produce a product.  They have one of the largest user bases in the entire world.  And they have one of the youngest CEO’s in the world.  But, the problem was that no one really understood how Facebook was going to earn the kind of profit that would give a good reason for the stock to appreciate.  So everyone together was wondering how high Facebook stock would go?  Facebook then gave their first public update and it wasn’t what everyone was hoping for.  There was no spectacular crushing of estimates as everyone expected.  People who first invested in Facebook during those early days just cut their losses and wrote it off during tax season.  I, on the other hand, asked myself if I would buy Facebook stock at $18 a share?  And the answer was absolutely!  So, I did not sell the stock, but actually decided to hold on to it until it hit $15 a share.  I figured, that I would reevaluate the stock at that point.  But that day never came.  The chart down below shows the expected users over the next few years.  As you can see, solid growth is expected for the foreseeable future.

How High Will Facebook Stock Go In 2016

Then came the ascent for the stock’s price.  Facebook’s price actually started to climb out of it’s all-time lows.  How high will Facebook stock go was a common thought that I had as I watched it continue to rise.  We were able to see that by July of 2013, Facebook’s stock appreciated up to $36 a share.  At this point, it doubled in price since its all-time low.  I was feeling very good and knew, as they continued to report new streams of income, that their stock price was going to go much higher.  Of course, I didn’t know how high at that point.   So I played the waiting game and kept all my original investment in the stock.  All I thought at the time is that there was a bunch of negative thoughts out there about the company and that told me to be a contrarian and just hold it.

At this point, think about the following.  I am guessing that most people that are reading this article have some solid investing experience.  In other words, you probably have heard information about a stock and made trades based off of this information.  If you look at most of the trades that people make based on the information that is disseminated through television programs and financial journalism, they soon find themselves on the wrong side of the equation.  For example, they sell on bad news after the stock is way down.  How many times have you watched that same stock recover those loses the next day and those that sold lost out on the rebound?  Then you have the opposite when you hear that the stock is way to high and it has to fall and then you sell only to watch it continue it’s rise.  Let’s not let that happen with Facebook.  People say that the P/E ratio is to high and you should sell.  If you are afraid of it, then you should probably keep it.  On a side note, you will want to take notice to the chart below showing a few different countries.  Think about the money they will be able to make off these people.  Crazy amounts going forward to say the least.  How high will Facebook stock go in the following years?  With these kinds of percentages, pretty high.

How High Will Facebook Stock Go In 2016

Let’s move on to Facebook’s value around January 2014.  This will help answer the question of how high will Facebook stock go?  Most people were talking about how Facebook was rising very quickly and that worried them.  There were those that took short positions and others that sold their shares happy to lock in their profits.  I once again took a long look at Facebook’s potential during that time.  My initial purchase was now priced at $62.57 a share.  The value of all the Facebook stocks that I had bought were now up about 64%.  This was a far cry from what it was when it was down around $18 a share.  It became fun to actually check its price on a daily basis.  But, how high will Facebook stock go before there is a major correction?  After I did some research on the subject, I decided to continue to hold on to it until it either hit $50 a share or it hit $70 a share.  I figured if it hit $50 a share, I would sell about half of the stock that I own in order to lock in my gains and protect me from any overall market collapse that may occur with my already depreciating stock.  On the other hand, I also decided that if it hit the $70 mark, that I would have to figure out my next moves for this company.

Well, because of my procrastination, the stock has continued to rise in value up to today’s closing of $109.41 a share.  Now I am happy that I put off doing anything with the stock at this point, but it does make me a bit nervous to hold on to it.  How high will Facebook stock go?  It has already exceeded my expectations for where I thought it would be.  When I first invested in Facebook during the IPO, I thought that if they capitalized on their traffic, they would have a great opportunity to double in price during the next 5 years.  I was giving Facebook 5 years to double their price.  I was, and I still am looking at the long term picture.  I have been one to make sure that I do solid proper research before making a decision.  Being rash usually leads to horrible return rates.  I have sold many stocks during the last couple of days because of what I think is coming during the next 90 days of trading. (Hint…it isn’t good)  But I just haven’t made up my mind about the Facebook stock that I purchased so long ago.

So here I am working through the decision making process and trying to put it all in words for you to read.  I am going to start with taking a look at their quarterly results.  What did Mark Zuckerberg say about his company?  That the company is growing.  That is the catalyst that I believe pushed the stock up to the point that it is right now.  He also stated that “Our community has continued to grow, and we see a lot of opportunity ahead as we connect the rest of the world.”.  These kind of comments are the kind that make investors salivate with future profits in mind.  I believe if he would of came out and said that growth had slowed a bit, the stock price would probably be closer to $80 a share.  But it didn’t. :)

Take a look at Facebook’s current revenue.  This is a huge gain over the last 12 months.  Can you see where this stock is headed as it continues to add on users all over the world?  The amount of users over the last year has increased by double digit percentages and they see continued user growth going forward.  What has me excited more than that though is the growth of the mobile users increased by a significant amount, which most investors know is the future of social marketing.  They increased their advertising revenue.   There are more points that were released concerning Facebook’s quarterly results, but I think you understand the picture.  It was all good.

With all this data that we are sorting through, we still need to figure out how high Facebook stock will go?  Is it going to go gangbusters for the next 12 months and increase by a proportional amount of the revenue gain?  In other words, do we see the stock increasing by 60%?  I am definitely on the fence of where this stock is going to go.  Another part of that report that struck me as really good is the fact that net income for the quarter increased by a very significant percentage compared to the same quarter last year.  What I am starting to see is that this company is no joke.  Take a look at the chart below that shows the growth of this stock price.

How High Will Facebook Stock Go

Using the chart above, take a look at the “head and shoulders” graph that is there.  Many investors believe that if the stock goes above the “head”, then you are looking at a busting out of the stock to levels much higher above the former “head”.  This is a technical way of looking at this company and where it is going.  I like to use all the possible data out there and that includes both fundamental and technical details.

How high will Facebook stock go?  The latest round of 12 month estimates put the stock hitting all time highs.  Some analysts even have it going closer to $150 a share.  But one thing is for sure, 14 out of the 15 analysts had it increasing over the next 12 months.  I like to think that I know a little bit about stocks and their valuations.  I typically only buy value stocks.  Facebook has been anything but a value stock.  It trades over 84x it’s EPS.  But is it actually overpriced?  If it continues to grow at the clip it grew since last year, you just may see this stock doubling again over the next 2-3 years.  How high will Facebook stock go in 2016?  Well it could easily hit $130 based on its current trend.

Do we see Facebook revenues going anywhere but up over the next few years?  I can honestly say no, and here is why.  As many of you know, I am now an educator.  What I like to do when it comes to Facebook, is ask my students how many of them actually don’t have a Facebook account.  You know the answer I get?  It is 95% of the students answering that they have a Facebook account.  Now some of the students say they no longer use Facebook, but that doesn’t mean they got rid of it.  The fact that they have a Facebook account is the part that interested me.  The hardest part of business is getting people through the door.  With 95% of my students having a Facebook account, I realize that they are easily doing this and will continue to do this.  Ask your family members if they have a Facebook account?  I bet anyone over 14 years old has one.  And let’s be honest here, Facebook advertisers are more concerned with adults that spend money, not the kids who use it.  The adult population who use Facebook are not going to drop it.  They are going to keep on talking to their friends from high school and college, thus giving Facebook increasing profits as more people jump on board.  I know this is a little bit of a hypothesis, but one that I feel will be proved over time.

Let’s finish answering the question of how high will Facebook stock go?  Before I give you my final answer and put it in writing to be judged as time goes on, think about this.  The average company in the internet industry is has earnings growth right now of 9.6% and Facebook is killing it with earnings growth of 118.89%  How long will this kind of growth last in my mind?  I believe you will see it continue to grow at a double digit rate for at least the next 4 quarters.  I believe that Facebook is doing everything right when it comes to increasing revenue from mobile devices.  I believe that Facebook will continue to report increased user signups over the next 4 quarters.  I believe that Facebook stock is still undervalued at this point in time.   How high will Facebook stock go?  I am predicting an increase of 20% in this stock price by December 2016.  This will put Facebook’s price at about $131 a share.  So what do I do in case of a major decline?  I have made up my mind that if the stock drops to $90 a share, that I would be selling some of the shares that I own to lock in some long term gains.

I hope at this point, you have taken a long look at all of the information I presented about Facebook.  What does it all mean?  Well, Facebook is doing very well and exceeding most analysts predictions.  It really reminds me of Apple stock and its meteoric type advances.  Will Facebook overtake Apple in the next few years?  The possibility is there and do you want to miss out on it?  I have made up my mind that I do not and therefore I will continue to hold on to the Facebook stock that I own.  How high will Facebook go?  I hope up to $1000 a share in the next 10 years.

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