The ratio tells investors how much they’re paying for each dollar of earnings. The P/E ratio compares a stock’s price to the earnings per share the company generates. One of these is the price-to-earnings ratio. There are a number of metrics that investors use when they research stocks to determine the health of a company relative to others in its sector and to the market as a whole. Most of the analysts are recommending that investors buy Facebook, but they’re also not expecting to see a repeat of last quarter’s performance. In March, Mark Zuckerberg was called to testify before Congress, along with some of his fellow tech CEOs, about what the platform is doing to ensure that erroneous information about COVID-19 and other topics isn’t shared as though it were fact. There’s also the uncertainty of Washington’s concern over the misinformation that spreads unchecked on Facebook and other social media platforms. Changes to Apple’s iOS operating system will make it harder for Facebook and other social media companies to target their ads to consumers, who can now opt out of having advertisers follow their every move online in order to serve up ads related to searches they’ve performed and sites they’ve visited. And the future looks a little murky for Facebook.Įven the company said that advertising growth could slow in the third quarter.
While investors don’t have a crystal ball, they still base their trading decisions on what is likely to happen in the future, not what has happened in the past. The answer to this question may be easier than it seems.
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