Market Overview

Facebook Shares on Roller Coaster Ahead of Special Meeting Tomorrow

Facebook (NASDAQ: FB) briefly rose in the premarket on Monday, before dropping in early trading.

This move comes on the eve of a special meeting the social media giant will hold which has drawn widespread speculation in the market and media, as well as mixed reactions from the investing public.

It remains unclear what Facebook's meeting will involve. Some, such as Benzinga's Louis Bedigian, believe it could involve a new Facebook phone or a stronger push into gaming. It could also be an announcement of plans to enter the automobile tech world, or something widely different.

Another possibility is new search technology. According to Deutsche Bank, the company could unveil such a technology to help users navigate the Facebook website more quickly.

Ultimately, it all remains speculation. It could be a new phone that will blow Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG) off the map, or perhaps the company has decided to paint its bathrooms light green instead of turquoise. As such, investors should be cautious before going "all in" just yet.

Meanwhile, Deutsche Bank has upgraded the stock from “Hold” to “Buy.” The market research firm expects Facebook's success in generating newsfeed revenue ($200 million in 3Q 2012) to accelerate in 2013. Deutsche Bank believes the company could generate over $800 million per quarter from newsfeed revenue alone this year.

Deutsche Bank also believes Facebook's new video and other ad products could be meaningful drivers for the company. Other potential hits include the search and mobile social application layer initiatives Facebook has for 2013.

Despite the upgrade and speculation on tomorrow's event, Facebook's stock has been shaky as the week opens. After rising around 1.5 percent in premarket trading, shares reversed and were down about 3 percent Monday morning.

Although its performance has been rocky since its IPO, Facebook has been on an upswing in the market since early January. On a broader level, the stock has gained over 18 percent in the past month and performed well since mid-November.

Yet, the sudden drop today may indicate a lack of investor confidence in tomorrow's announcement. Perhaps investors believe it's more hype than anything else and are dumping the stock accordingly.

Given the stock's overall performance since its lackluster IPO, shareholders should keep a close eye on tomorrow's events and as the company moves forward.

Posted-In: News Upgrades Previews Events Intraday Update Analyst Ratings Movers Tech Best of Benzinga

 

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