Why Facebook stock moved higher on Wednesday

The $1 trillion company has been winning over investors in recent months.

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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) rose more than 2% as of 3:30 p.m. EDT. This increase comes even as the S&P 500 was down 0.3% as of this writing.

The stock is likely up primarily due to an overall bullish day for many growth stocks like Facebook.

So what

Explaining some of Facebook stock's move higher, the tech-heavy Nasdaq Composite was up 0.2% as of this writing. Many tech stocks were up on Wednesday and many growth tech stocks rose several percentage points or more.

Tech may be doing well for a number of reasons, including worries that the delta variant of the coronavirus will lead to more people staying at home and spending more time on the internet. Many tech stocks benefited from lockdowns in 2020.

But Facebook's advertising-driven business performs better in a thriving economy, hence its second-quarter revenue growth rate of 56%. This was driven by higher advertiser demand. Its user base, however, did grow nicely during lockdowns.

The stock's gain on Wednesday could also reflect a continuation of a generally bullish trend for Facebook stock over the last six months as demand for the stock rises.

Now what

Facebook warned in its second-quarter earnings release that growth will decelerate in the second half of 2021 as the company laps more difficult year-over-year comparisons. This, of course, is the case for most digital advertising companies.

Investors shouldn't get too tied up in trying to justify a stock's daily moves. Nevertheless, it's safe to say there's healthy demand for Facebook stock, with the company now commanding a market capitalization greater than $1 trillion.

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

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Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies 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 has recommended Facebook. The Motley Fool Australia has recommended Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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