Facebook Inc. (FB) is friending investors again on Thursday.
Shares of the social media giant were soaring before Thursday's opening bell, up nearly 12% at their morning highs. If gains hold, the stock will have climbed nearly 30% to kick off 2019.
The burst higher comes after Facebook handily cleared the low bar set for its fourth-quarter results, with revenue besting estimates by more than $500 million and earnings per share topping estimates by $0.20.
"Bottom line, the long knives have been out against Facebook for quite some time, but the upside to the numbers should put them to rest for the time being," the Action Alerts PLUS team wrote in its review of the stock, which represents 2.45% of its portfolio. "Although revenue growth will continue to slow in 2019 and pressure on margins will continue, these results showed how the company is managing the transition it laid out for some quarters now."
The Action Alerts PLUS team rated the stock a "One,"indicating a "Buy" recommendation, after its heavy slide into year-end 2018 provided an attractive entry point. It continues to hold that rating after the earnings results.
Facebook officials fleshed out their thoughts on the results and the road ahead.
"I think it's worth emphasizing that while I'm excited about the road map that we have and it's going to be great over the long term, the growth of the business over the next year, a few quarters or the near term is going to be mostly based on the growth of (Instagram) Stories and the core News Feed work," CEO Mark Zuckerberg said, hitting on the road map. "We have a lot of work still to go there to monetize at the same levels as News Feed and I'm confident that we're going to get there. But I want to make sure that we're giving the right outlook on how we expect the near future to go."
The all-important engagement trends should work to assuage some fears as the company irons out its trajectory.
Monthly active users picked up 9% year over year to 2.32 billion, and it is now estimated that there are 2.7 billion people on the company's Facebook, WhatsApp and Instagram platforms. That equates to over one-third of the world population.
The massive user base is helping drive advertiser revenue as the company's market share of consumer eyeballs is unparalleled and trumps concerns on data privacy and consumer manipulation that have harmed its reputation, not least with Apple Inc. (AAPL)
"I'm excited to announce today that we have more than 7 million active advertisers across our services," COO Sheryl Sandberg said. "From local shops to global brands, companies all over the world are growing and hiring because they can reach their customers on our platforms."
Sandberg added that the holiday shopping season served as a big catalyst for the company's advertiser growth as retailers piled ad spend onto its group of platforms even beyond the flagship Facebook news feed.
"People are creating more stories and sending more messages, which means these are emerging areas of opportunity for marketers," Sandberg told analysts. "Today, we're also announcing that 2 million advertisers are using Stories to reach customers across our family of apps."
Sandberg also touched on the company's effort to integrate its platforms, which means advertisers can now buy Stories ads across Facebook, Instagram and Messenger. The continued inflow of advertisers certainly helps the company curb concerns about its advertising pricing power.
Overall, the sentiment appears to be that the worst is over for Facebook as the majority of analysts raised price targets for the much-hated stock.
"We feel we could be in a period of sustained re-rating as the worst FB fears appear not to have been realized," RBC Capital Markets analyst Mark Mahaney said on Thursday. "We feel the current Revenue growth deceleration is modest and believe daily active users increasing in the U.S. for the first time in 3 quarters is a positive sign."
Mahaney raised his price target to $200 from $190 and reiterated his "Buy" rating on the stock.
At the very least, the company is betting that the stock is undervalued with its massive buyback program.
The social media behemoth bought back $3.5 billion in shares in the fourth quarter, building on $4.3 billion spent in the third quarter. Amid its year-end slump, the Zuckerberg-led company disclosed a $9 billion addition to its buyback authorization in December.
TheStreet's Eric Jhonsa noted that Facebook ended the year with $41.1 billion in cash and no debt, which should allow it to continue to buy back stock should it so choose.
As the stock surges into 2019, it will certainly not be the only one doing so.