'Fast Money' Recap: Why You Should Really Like Facebook Now
Shares of Facebook (FB) - Get Report climbed 1.3% on Wednesday and an additional 4% in after-hours trading following the company's revenue and earnings beat.
"These numbers were fantastic," Tim Seymour, managing partner of Triogem Asset Management, said on CNBC's "Fast Money" TV show. The stock can continue to move higher, at least for the next quarter or so, because the company's revenue growth remains very impressive.
Pete Najarian, co-founder of optionmonster.com and trademonster.com, is long the stock as a trade but plans to take profits on Thursday. While the results are very good, he pointed out that shares have rallied 13% before earnings and are now up even more following the results. The stock seems likely to trade sideways for a while, he reasoned.
Guy Adami, managing director of stockmonster.com, said taking someprofits is never a bad idea. However, investors buying Facebook for the long term can stay long because revenue growth remains strong, margins are increasing and the valuation is still reasonable, he explained.
Alphabet (GOOGL) - Get Report also had good advertising results, according to Karen Finerman, president of Metropolitan Capital Advisors. She said the advertising market is growing, benefiting both companies.
Bob Peck, managing director at SunTrust Robinson Humphrey, called Facebook's earnings results "great across the board." The company reported an acceleration in monthly active users -- a whopping 1.55 billion users -- while revenue per user and margins climbed in the quarter as well.
Demand from advertisers to be on the Facebook platform remains strong, too, which is giving the company pricing power. Peck explained that Facebook also has a lot of long-term "runway" with the Instagram and WhatsApp platforms.
Unlike Facebook, Whole Foods Market (WFM) missed on the top and bottom lines and guided for sales growth of just 3% to 5% for 2016 compared to 8% for 2015. It also announced a new $1 billion share buyback plan. Shares fell 6%.
While some investors questioned the company's decision to buy back stock at a time where significant investments into the business are needed, Finerman said she didn't see an issue. Whole Foods, while struggling, has a strong balance sheet and is able to perform both tasks. The stock is starting to look attractive.
Revenue were good, but margins remain under pressure, Najarian pointed out. Kroger (KR) - Get Report and other traditional supermarkets continue to put pressure on organic grocers. Ultimately, he expects Whole Foods to prevail, especially with its new 365-branded stores.
Shares of Time Warner (TWX) fell 6.6% on Wednesday despite beating on revenue and earnings estimates. However, the company's lower-than-expected guidance for full-year 2016 spooked investors. Even shares of Disney (DIS) - Get Report fell 2%. The media juggernaut is scheduled to report earnings on Thursday.
Rich Greenfield, an analyst at BTIG, has a neutral rating on Disney but spoke more broadly on the cord-cutting movement. It's a "seismic change" for traditional retailers, he said. It not only puts pressure on the company's advertising revenue but it also hurts cable bundle pricing. As consumers becoming less interested in watching live TV, they are increasingly making the move to other alternatives such as Netflix (NFLX) - Get Report .
Too many traditional media companies don't have the technology for a direct-to-consumer business model, he added. Greenfield has a buy rating and $136 price target on Netflix.
Disney is different than Time Warner because it is far more diversified, Seymour said. The company has its studio business and theme parks, and investors are getting very excited about the upcoming Star Wars movie. Longer-term investors should not sell their Disney position ahead of earnings.
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