Why Facebook Stock Moved Higher on Wednesday


What happened

Shares of Facebook (NASDAQ:FB) rose more than 2% as of 3:30 p.m. EDT. This increase comes even as the S&P 500 was down 0.3% as of this writing.

The stock is likely up primarily due to an overall bullish day for many growth stocks like Facebook.

Facebook CEO Mark Zuckerberg discusses the company's 10-year roadmap at F8 2018

Facebook CEO Mark Zuckerberg. Image source: Facebook.

So what

Explaining some of Facebook stock’s move higher, the tech-heavy Nasdaq Composite was up 0.2% as of this writing. Many tech stocks were up on Wednesday and many growth tech stocks rose several percentage points or more.

Tech may be doing well for a number of reasons, including worries that the delta variant of the coronavirus will lead to more people staying at home and spending more time on the internet. Many tech stocks benefited from lockdowns in 2020.

But Facebook’s advertising-driven business performs better in a thriving economy, hence its second-quarter revenue growth rate of 56%. This was driven by higher advertiser demand. Its user base, however, did grow nicely during lockdowns.

The stock’s gain on Wednesday could also reflect a continuation of a generally bullish trend for Facebook stock over the last six months as demand for the stock rises.

Now what

Facebook warned in its second-quarter earnings release that growth will decelerate in the second half of 2021 as the company laps more difficult year-over-year comparisons. This, of course, is the case for most digital advertising companies.

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Investors shouldn’t get too tied up in trying to justify a stock’s daily moves. Nevertheless, it’s safe to say there’s healthy demand for Facebook stock, with the company now commanding a market capitalization greater than $1 trillion.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.




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