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

Investors are excited about the social media giant's push into e-commerce.

| More on:
Investor with stock market graph hitting new all-time high

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

 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.

More on International Stock News

A woman is excited as she reads the latest rumour on her phone.
Broker Notes

Goldman Sachs says this US stock is replacing Tesla in the Magnificent Seven

And no, it's not a tech company. It's in the healthcare sector.

Read more »

A man looking at his laptop and thinking.
Share Gainers

Should I buy Nvidia stock as an Australian investor?

Many Aussies are thinking of jumping on the bandwagon, but they need to think about these issues first.

Read more »

Digital rocket on a laptop.
Broker Notes

Is the Nvidia share price on course to reach US$1,400?

You betcha, says one analyst.

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Could Nvidia become the most valuable stock on earth?

Can anything stop the Nvidia stock price?

Read more »

A group of young ASX investors sitting around a laptop with an older lady standing behind them explaining how investing works.
International Stock News

What can ASX investors learn from Warren Buffett's latest buys and sells?

We've just found out what Buffett's been buying and selling recently.

Read more »

electric vehicle such as Tesla being charged at charging station
International Stock News

Why Tesla stock tanked in January

Will the electric vehicle leader see earnings decline once again in 2024?

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
International Stock News

Will Nvidia stock be worth more than Microsoft by 2030?

The graphics giant has been growing at a much faster pace than Microsoft, but can it sustain that momentum?

Read more »

Man with hands in the middle of two items with money bags on them.
International Stock News

Stock-split watch: Is Tesla next?

Stock splits are fun. But how much substance there is in Tesla splitting its stock is debatable.

Read more »