BRAZIL - 2020\/07\/10: In this photo illustration a Facebook logo seen displayed on a smartphone. ... [+] (Photo Illustration by Rafael Henrique\/SOPA Images\/LightRocket via Getty Images)<\/p>\n
Facebook stock (NASDAQ: FB) reached an all-time high of almost $305 less than a month ago before a larger sell-off in the technology industry drove the stock price down nearly 20% to its current level of around $250. But will the companys stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent?<\/p>\n
According to the Trefis Machine Learning Engine, which identifies trends in the companys stock price data since its IPO in May 2012, returns for Facebook stock average a little over 3% in the next one-month (21 trading days) period after experiencing a 20% drop over the previous month (21 trading days). Notably, though, the stock is very likely to underperform the S&P500 over the next month (21 trading days), with an expected excess return of -3% compared to the S&P500.<\/p>\n
But how would these numbers change if you are interested in holding Facebook stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Facebook stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!<\/p>\n
MACHINE LEARNING ENGINE try it yourself:<\/p>\n
IFFB stock moved by -5% over 5 trading days,THENover the next 21 trading days, FB stock moves anaverageof 3.2 percent, which implies anexcess returnof 1.7 percent compared to the S&P500.<\/p>\n
Trefis<\/p>\n
More importantly, there is 62% probability of apositive returnover the next 21 trading days and 53.8% probability of apositive excess returnafter a -5% change over 5 trading days.<\/p>\n
Some Fun Scenarios, FAQs & Making Sense of Facebook Stock Movements:<\/p>\n
Question 1: Is the average return for Facebook stock higher after a drop?Answer:<\/p>\n
Consider two situations,<\/p>\n
Case 1: Facebook stock drops by -5% or more in a week<\/p>\n
Case 2: Facebook stock rises by 5% or more in a week<\/p>\n
Is the average return for Facebook stock higher over the subsequent month after Case 1 or Case 2?<\/p>\n
FB stockfares better after Case 2, with an average return of 2.4% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 5.3% for Case 2.<\/p>\n
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details theaverage return for the S&P 500 after a fall or rise.<\/p>\n
Try the Trefis machine learning engine above to see for yourself how Facebook stock is likely to behave after any specific gain or loss over a period.<\/p>\n
Question 2: Does patience pay?<\/p>\n
Answer:<\/p>\n
If you buy and hold Facebook stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you at least if the company is otherwise strong.<\/p>\n
Overall, according to data and Trefis machine learning engines calculations, patience absolutely pays for most stocks!<\/p>\n
For FB stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:<\/p>\n
Trefis<\/p>\n
Question 3: What about the average return after a rise if you wait for a while? <\/p>\n
Answer:<\/p>\n
The average return after a rise is understandably lower than a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks although FB stock appears to be an exception to this general observation.<\/p>\n
FBs returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with returns for the S&P 500.<\/p>\n
Trefis<\/p>\n
Its pretty powerful to test the trend for yourself for Facebook stock by changing the inputs in the charts above.<\/p>\n
What if youre looking for a more balanced portfolio? Heres a high quality portfolio to beat the market with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year consistently<\/p>\n
See allTrefis Price EstimatesandDownloadTrefis Datahere<\/p>\n
Whats behind Trefis? See How Its Powering New Collaboration and What-Ifs ForCFOs and Finance Teams |Product, R&D, and Marketing Teams<\/p>\n
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Read more: BRAZIL - 2020\/07\/10: In this photo illustration a Facebook logo seen displayed on a smartphone. ... [+] (Photo Illustration by Rafael Henrique\/SOPA Images\/LightRocket via Getty Images) Facebook stock (NASDAQ: FB) reached an all-time high of almost $305 less than a month ago before a larger sell-off in the technology industry drove the stock price down nearly 20% to its current level of around $250 Continue reading
\nMachine Learning Answers: Facebook Stock Is Down 20% In A Month, What Are The Chances Itll Rebound? - Forbes<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"