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We've just released our latest Facebook stock price analysis, and it shows more market-beating gains for the stock in September. The Facebook stock price in 2016 has already climbed 18%, outperforming the modest 6% gain of the Dow Jones Industrial Average.
But that's just the start for FB stock…
We'll show our subscribers this detailed Facebook stock price analysis and why the FB stock price will climb shortly. But first, we want to make sure Money Morning readers know why the FB stock price has climbed 18% in 2016…
Facebook Stock Price Analysis: Why FB Is Soaring
Facebook's Q2 2016 earnings report is the biggest reason for the Facebook stock price rally in 2016.
For Q2, Facebook reported earnings per share (EPS) of $0.97 on $6.44 billion in revenue. Analysts expected $0.82 on $6.02 billion in revenue.
From the same time a year ago, EPS increased by 94% and revenue increased by 59%.
Facebook also added more users to its already massive base in Q2. Analysts expected 1.11 billion daily active users (DAUs) and 1.69 billion monthly active users (MAUs). But Facebook reported 1.13 billion DAUs and 1.71 billion MAUs.
The social media giant also reported impressive user growth for its other services.
When CEO Mark Zuckerberg first purchased picture app Instagram in 2012, it had a total of 30 million users. Now Instagram has over 500 million MAUs.
Facebook's standalone app, Messenger, also has impressive numbers, reporting 1 billion users.
All of these factors helped drive the FB stock price 18% in 2016. And even though FB is trading near all-time highs, our Facebook stock price analysis shows even more gains in September from today's opening price.
That's why we're bringing our Facebook stock price analysis to readers before September, to lock in even more profits…
This Facebook Stock Price Analysis Shows Even More Gains in September
In our Facebook stock price analysis, we made a shocking discovery…
The Facebook stock price has climbed every year in September from 2012 to 2015, with an average profit of 11.9%.
And the reason is surprisingly simple…
You see, August is a popular vacation month for financial executives and hedge fund managers. According to a Gallup poll, 62% of households making $75,000 or more said they would vacation for more than a week in the summer. And 20% of those individuals said they would vacation for more than two weeks.
So when these executives and big investors are away, there is less activity in the markets.
For example, the volume for the S&P 500 was 3.9 billion for June. So far for August, it's 3.3 billion. That's a 15% drop in activity.
But once these investors are back, the markets return to normal. And because hedge fund managers and financial executives are looking to boost Q4 numbers, they enter strong stocks like FB.
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For example, the average trading volume for FB stock from August 2012-2015 was 43 million shares. From September 2012-2015, the average was 50 million shares. That's an increase of 16% in trades.
So as the buying activity increases, prices climb and more and more investors want a piece of the action. From retail investors to hedge funds, no one wants to get left behind when a stock starts to rally.
And while there is a chance to lock in short-term gains now, it's also important to look at the long-term outlook for Facebook stock.
By 2020, Money Morning Director of Tech & Venture Capital Michael A. Robinson projects that FB stock will trade for $250 per share. From today's opening price of $123.34, that's a potential profit of 102%.
The Bottom Line: Our Facebook stock price analysis shows that the FB stock price has climbed every September since the stock hit the market. Hedge funds and large institutions start to buy more shares in September, which helps the FB stock price climb. On average, the FB stock price has climbed 11.9% in September. That means FB stock could trade for as high as $138 per share if that trend continues.