PreMarket Prep Stock Of The Day: Facebook

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Many technology stocks have had a major rally off their March lows, some like Shopify Inc SHOP, Netflix Inc NFLX and Amazon.com, Inc. AMZN have roared back to make new all-time-highs and then some.

Not all tech stocks replicated that feat, and one that is some distance from it all-time-high is Facebook, Inc. FB, making it PreMarket Prep Stock Of The Day.

Facebook Peaks Ahead Of The Broad Market

The S&P 500 index did not peak until mid-February. Facebook made its all-time-high Jan. 24 at $224.20 and is all-time-closing high the same day at $223.23.

Just as it peaked ahead of the index, Facebook also bottomed three days ahead of the market retreat when it reached $137.10. That level coincides with its early January 2019 low of $135.91.

Facebook Slower To Rebound Off The Low

While the index recovered half of its losses from the decline by April 9, Facebook lagged behind on approaching the key technical level of $180.65. In fact, after putting a pair in that exact area over the last few days, the issue has climbed to $182.40 off the impressive first-quarter beat by its peer Snap Inc SNAP.

Caution Ahead Of Facebook's Q1 Report

Facebook will announce first-quarter earnings after the close on April 29. PreMarket Prep co-host Dennis Dick, a longtime Facebook shareholder, sold his stake this week.

"With the slowdown in the economy for the most of the quarter, it is likely businesses are going to cut back on their advertising budgets, which may have a negative impact on earnings."

Facebook Moving Forward

Technology stock darlings like Facebook often have a pre-earnings run to the upside. Since going public in 2012, Facebook has only whiffed on EPS one time and three times on revenue. 

On the positive side, Facebook could still pull a Snapchat and blow away revenue estimates. Perhaps the company will find the same tailwind from people who not leaving their homes and post an increase in daily active users and time spent on the platform.

On the negative side, with the impressive string of earnings reports over the last eight years and the potential for a shortfall in revenues, any earnings or revenues miss may have a devastating impact on Facebook's share price.