The 2020 pandemic hit many companies hard, while other companies took it as a chance to grow, seemingly unaffected by the state of the world around them. NVIDIA (NASDAQ:NVDA) came out as one of those thriving businesses and achieved gains of 122% in 2020. The company’s graphics processing units (GPUs) were present and needed for trends that accelerated exponentially due to the pandemic, boost...
020 and 2021 have been a weird time for growth stocks. Many are still down and gently recuperating while others see danger on the horizon. However, Facebook (NASDAQ: FB) is quietly floating amidst the rough currents.
The company’s shares have been slowly rising but are still breaking personal records. On Tuesday, the stock was higher than ever before at $311.35 dollars. It later stabilized to close at $306.32, which is still up 12% year to date. This is higher than the S&P500, with an 8.5% increase in the same period.
This presents an attractive invitation to invest in the tech company, even at current prices. Investors trust that the company will deliver, and Facebook is up for the task.
Facebook’s Revenue Could Increase Significantly This Year
After a revenue dropped last year due to advertisers reducing or outright stopping their ad campaigns during lockdowns, Facebook has managed to stay afloat.
The company closed its fourth quarter of 2020 with a 33% revenue increase year over year. It was a strong quarter for them, and it was highly attributed to the rise in online commerce trends caused by the pandemic continuing into the holiday season.
The company expects its revenue to stabilize and accelerate during the first and second quarters of 2021. This increase will likely come with an upped demand in ad targeting and campaigns. It will probably decelerate by the start of the third quarter, but this won’t stop Facebook’s growth.
Are Facebook’s current stock values undervalued?
Yes. Facebook has started to gain momentum and shows no signs of slowing down, at least during the first half of the year. The price-to-earnings ratio is at 30. If we look at analysts and investors who expect the company’s earnings per share to grow 22% annually in the next 5 years, it is easy to see that the current values are relatively low.
There is a good chance that Facebook’s slow but steadily accelerating growth is an investment for the long run.