Hello, welcome investors to the Lotbd.xyz my name is "Jeff Beers" today we'll be looking at facebook stock and i'm going to give my price prediction for facebook stock in the year 2022 their fiscal calendar runs from January to December.
So we're coming to the end of 2020 then we've got 2021 on top of that where will facebook stock sit in January of 2022 reminder as always that my stock picks and projections are just my opinion for your entertainment.
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So far and as a free bonus if you're interested i just released my 15 minute stock analysis report link for that is in the description this is a great little report that will give you some hacks for researching stocks quickly save you some time and help you build a more efficient see list all right first things first let's take a look at where facebook stands today.
We have a price of 293.66 current p e ratio of 35.91 eps in the trailing 12 months has been eight dollars and eighteen cents and you can see the 52-week range we've got a low of 137 and a high of 304. quick look at the chart off to the right no real surprise facebook has been going up slowly but surely we obviously had the march dip with uh covet here and it's been a little bit more of a bumpy road in 2020
As you kind of see the fluctuations and a lot of that has to do with the ad revenue with consumers and advertisers you know feeling the uncertainty of the pandemic there has been some dips along the way with facebook but currently sort of on an upward trajectory and sits at 293.66 all right so i've done a couple posts microsoft and apple where i used this price prediction formula both were very popular so thanks to everybody for your support.
There but if you haven't see those let's just go over the quick points of how we do this and you see that top bullet point formula is very simple our price equals uh the projected pe times the projected eps so we're going to go through some numbers and get to a pe projection and an eps projection that will give us the price as i called out in the beginning.
Facebook fiscal year runs January through December so we haven't completed 2020 yet and we still have 2021 to go so this price that i'm going to be talking about today is essentially for January of 2022 and incorporates the full year earnings of 2021 uh essentially 16 months away and of course at the bottom this is pure subjective data based entirely on my opinion across.
The board for the price to earnings eps where the economy will go all those things i spend a lot of time researching stocks this is you know i put my best analysis foot forward but very important to understand that this is subjective data and not much more than a 50 50 chance that it comes to fruition all right so the first step in the process is to project eps and we do that by taking into account.
What analysts think of the eps today and forward and we kind of look back a little bit to see how has facebook performed against analysts expectations in the past all right so at the top of the screen we have our earnings history over the past four quarters and in the green box.
I have highlighted the surprise percentage this is simply the percentage amount that's that facebook has posted compared to what the analysts actually expected so you start back in september of 2019 you had 11 surprise then 1.2 then minus 2.3 and then here in their most recent quarter a huge 30 surprise mostly because analysts were sort of down on ad revenue prospects and it turns out that you know facebook did okay in that department so eventually i have to make a call on this surprise percentage.
I'm going to go with the 15 surprise of the three posts i've done like this this has been the hardest one to come to a conclusion but i'm going with 15 i'm going to say somewhere in the middle of the september 29th earnings and the june 29th earnings is what i'm expecting out of facebook going forward now we'll switch down to the bottom rows for eps we see that the current estimate which is the yellow box.
All the way across the current estimate for the next year next full year is 10 15. that's sort of in the blue yellow box there at the bottom i have the orange box and this is what analysts were calling for only 90 days ago and you can see with facebook if you go all the way to the right of the orange row 981 90 days ago is what analysts projected.
Now we're up top in the blue and they're already up to ten dollars and fifteen cents we've gotta last 16 months with this projection which is not easy so off to the far right in the blue text i'm going to use 13 which takes 10 dollars and 15 cents it factors in my surprise percentage of 15 percent there's a momentum play here with facebook where i think there's a lot of concern with ad spends pouring into the facebook platform.
My gut says those fears are overblown so i'm going to give a momentum boost bottom line we land at 13 all right so we have our eps prediction of 13 again subjective based on my opinion now we need to get the other component of our price formula and that is the p e ratio and again this has to be a p ratio projection for january of 2022 what are people paying for facebook stock january of 2022.
So the best we can do is look back at history see what people have paid in the past that will help us choose a number for the future okay so skipping right ahead you see i've highlighted the trailing pe number over the past several years these are annual numbers except for the first one which is obviously the current and you have 35 32 19 34 44 and 105.
I've added those up for you the average is 33.42 and once again with facebook this is a little bit of a harder game than it was with microsoft and apple which have been fairly predictable businesses i'm going to use the number of 32 in the back half of 2020 i think ps are awfully inflated right now i don't know if anyone would argue with that and while i don't expect a major correction in pes i do expect to see some dips in small corrections occurring it is of course very hard right now.
Because with interest rates at zero you're going to have inflated pes bottom line though through all that i'm using a pe prediction of 32 for our exercise here today all right so we've got our eps prediction of 13 got our pe prediction of 32 this is for the the earnings call on january of 2022 let's see how things stack up okay so right at the top of the board 13 eps times 32 p e equals a share price of 416 that is plus 42 from where we stand today now.
This is a longer timeline than i had to predict for apple and microsoft those companies have a different fiscal year than the gregorian calendar with facebook and where we are today basically in the beginning of september i have to outlook 16 months so 42 is sort of high but then you start thinking about what we're talking about here january 2022 that may not be too bad could very well suggest to some degree that facebook has the most upside potential between microsoft and apple.
Depending on how much you believe in my data now in the middle of the screen we're going to flip the formula a little bit and see what the outputs are if we went with the lower eps but a higher pe so if eps came in at 10 instead of 13 and we use today's pe of 35 interesting that facebook only goes up 19 and lands about 350. on the flip side if we went with a higher eps and a lower pe we would end up at 450 dollars which is plus 53 percent really the big factor though is pe understanding how much you're paying for those earnings per share will really help you look at stocks more deeply and come to a firmer conclusion on whether or not you should buy facebook eps is a little squishy if you will right now
Because 2020 certainly q2 and q1 did not go as expected due to the pandemic and ad dollars being cut so you almost have to go back to 2019 in an odd way look at how those quarters sort of fluctuated and then you have to pick your side on 2021 are we bouncing back as an economy is the pandemic concerns going away those are all questions you have to answer internally for my side on 2021 at least for planning purposes i'm assuming a regular year i'm assuming that health concerns dwindle and while there will still be pain in certain areas.
I don't see facebook having to deal with a lot of the same pain say as like commercial real estate all right so the bottom line here is regardless of my stock prediction i do think that facebook is a good long-term stock you're talking about a company that has plenty of cash on hand they have the ability to acquire new companies if needed you're pretty much free and clear on the china risk side and for all the criticisms that zuckerberg gets let's just face it that over the past two or three years while he's been under the microscope.
He has produced solid profits the second point to remind you that i've already called out is this has been interesting with facebook compared to apple and microsoft and the same exercise because of what they're showing in the price potential that plus 40 some percent price potential is something we did not see in the other two posts i did so for my desk it definitely warrants additional research and consideration and potentially add facebook.
As a strong buy from my camp and if you're new to stock market analysis i do want to remind you just how many moving parts are involved in this price projection right you have contracts you have capex you have economic influences you have advertiser influences so please don't just take this word and run to the streets i would say it's an informed prediction but a lot can change over 16 months and most stock market analysts the guys that you read and barons and bluebird and all those things they get to re-analyze every quarter and adjust their predictions that's why they tend to hit on things so often alright guys.
So last point just to keep in mind when you are out there making trades if you're in it for the long term pe is big it adds that multiplier to every dollar that you spend so please keep that in mind when you're trying to buy dips buy high buy low please look at the pe it makes a big difference in the long run all right guys hope you enjoy this price prediction on facebook stock if you have any stocks you'd like to see please leave them in the comments i i make a little see list of my own for upcoming post and as always please give me a like and subscribe if you enjoy this article thanks for reading we'll see you on the next post.