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Why Facebook stock surged to a new all-time high on Wednesday

Investor with stock market graph hitting new all-time high
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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Facebook (NASDAQ: FB) jumped 8.2% to a new closing high of $303.91 on Wednesday, after analysts helped to focus investors' attention on the digital ad titan's massive growth opportunity in e-commerce. 

So what 

On Tuesday, UBS analyst Eric Sheridan reiterated his buy rating on Facebook's stock and boosted his price forecast from $242 to $330. Even after today's move, Sheridan's new target price represents potential gains for investors of roughly 9%.

Sheridan believes Facebook's recent push into e-commerce will be a significant source of additional growth for the social media leader. In May, Facebook partnered with Shopify and other e-commerce companies to launch Facebook Shops, a new online shopping platform. And yesterday, BigCommerce said it's teaming up with Facebook to launch a new feature on Instagram that would allow users to purchase products without leaving the popular photo-sharing app. In turn, Sheridan expects Facebook to become a powerful force in social commerce.

Now what

Facebook is already benefiting from the rise of e-commerce, as many online retailers spend heavily to promote their wares on its social media networks. But Facebook is taking steps to make it easier to make purchases directly from its social media sites, and, in the process, claim a larger share of the online retail industry's profits.

Judging by the stock's recent gains, investors applaud Facebook's e-commerce initiatives.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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 Joe Tenebruso has no position in any of the stocks mentioned. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook and Shopify. The Motley Fool Australia has recommended Facebook. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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