Stocks on Wall Street fell Friday, with the main averages all finishing low, but within sight of their recent records amid continued optimism about the economic recovery.
The next week is expected to be an eventful week. It brings back a series of high-profile earnings reports from companies such as Roku (NASDAQ :), Square (NYSE :), Pfizer (NYSE 🙂 and Moderna (NASDAQ :), as well as more important economic data, including the latest US report.
Regardless of which direction the market is heading, below we highlight one stock that is likely to be in demand and another that could have even more downsides.
However, keep in mind that our timeframe is for the next week only.
Stocks to Buy: Facebook
Facebook (NASDAQ 🙂 stocks – which have just hit their biggest weekly gains in nearly two months – have recently shed a tear and have been down by about 26% up.
The social media giant, which also owns Instagram and WhatsApp, has benefited immensely from an acceleration in online advertising spending after a brief slowdown amid the coronavirus pandemic.
FB shares – which are up about 61% in the past 12 months – ended Friday at $ 325.08. It hit $ 331.04 on Thursday, recording its first all-time high since August.
At current levels, the Menlo Park, California-based social networking company is estimated to be worth $ 936.3 billion, which is closer to its coveted market cap of $ 1 trillion.
Investor sentiment lifted last week as Facebook reported a monstrous first quarter and earnings, again thanks to strong ad sales.
Earnings per share were up 93% from the same period last year to $ 3.30, far ahead of expectations for earnings per share of $ 2.35. Sales, meanwhile, were up 48% year-on-year to $ 26.2 billion, well above estimated sales of $ 23.7 billion.
Ad revenues were up 46% from last year, while other revenues, including e-commerce and augmented reality and virtual reality (AR / VR) headsets, were up 146% to $ 732 million.
In fact, Facebook CEO Mark Zuckerberg repeatedly referred to AR and VR as the next frontiers in a years-long quest for its billions of users to communicate, shop, and sell products.
Zuckerberg also said the company will focus on developing e-commerce features beyond its advertising business.
To add to these encouraging developments, Facebook said that Monthly Active Users (MAUs) – widely regarded as a key barometer of Facebook's global growth – are up 10% over the same period. years ago to 2.85 billion. Daily Active Users (DAUs) – another key metric – were up 8% to 1.88 billion.
Despite several headwinds, such as ongoing antitrust investigations, ongoing privacy concerns, and impending changes that could negatively impact the advertising company's core businesses, FB stock appears to be a safe bet this week amid the company's many positive trends.
Stock To Dump: Virgin Galactic
Virgin Galactic Holdings (NYSE 🙂 shares seem to remain under pressure in the coming days as investors worry about the negative impact of several factors that plague the beleaguered tourism business.
The company announced late Friday that it will revise its official financial results for 2020 in response to new accounting guidelines issued by the Securities and Exchange Commission (SEC) for special acquisition companies (SPACs).
As a result of the reformulation, Virgin Galactic also said it will delay the release of its upcoming quarterly earnings report by about a week until Monday, May 10.
The aerospace company would initially release its first quarter financial results on Tuesday, May 4, after the closing bell.
The SEC guidelines raise the question of whether warrants issued by blank check companies, such as Virgin Galactic, and DraftKings (NASDAQ :), can be considered equity instruments.
Virgin Galactic Daily Chart
The SPCE stock ended Friday's session at $ 22.15, nearly 65% ??below its all-time high of $ 62.70 touched on February 4. Year-to-date, stocks – which were once up 164% – are now down 7% until the end of last week.
At current valuations, the Las Cruces, New Mexico-based space tourism company has a market capitalization of $ 5.3 billion, despite losing money and generating little to no revenue.
Virgin Galactic's losses have accelerated in recent weeks following the news that ARK Invest & # 39; s Space Exploration & Innovation ETF (NYSE :), run by noted growth investor Cathie Wood, has invested nearly half of its stake in sold the company. By doing this, Woods reduced holdings of the ETF's SPCE shares to one of its smallest holdings.
That followed news of significant stock sales from billionaire founder Richard Branson and noted venture capital investor Chamath Palihapitiya, who is also chairman of Virgin Galactic.
Given the wave of insider sales and waning enthusiasm for SPACs, as well as delays in the space test program and commercial flights, SPCE's stock appears to be a vulnerable investment in the short term.
