A Closer Look at Facebook, Inc. (NASDAQ:FB) Stock

A Closer Look at Facebook, Inc. (NASDAQ:FB) Stock

A Closer Look at Facebook, Inc. (NASDAQ:FB) Stock

Why such a cavalier attitude toward the billion-dollar fines, one might ask? Well, the quarterly results say everything.

Facebook generated over $15 billion in revenue in the quarter. They grew it 26 percent year-over-year. Even adjusting for a $3 billion legal expenses (FB was smart to account for it preemptively rather than let it hang over the stock), net income was well over $2 billion. One-time expenses/write-offs happen. It’s just a cost of doing business.

Note that without the fine, operating margins would have been 20 percent higher and diluted EPS would have been $1.04 higher.

What about metrics? They too, show an underlying business that is operating smoothly. Daily active users (DAUs) averaged 1.56 billion in March, representing an 8% increase year-over-year. Users don’t seem that bothered by the privacy concerns, after all. DAU growth was buoyed by international users in India, Indonesia, and the Philippines.

It’s easy to forget how global Facebook’s reach is. It means that the company’s market is the entire world (except in China where Facebook is blocked). The sky really is the limit to monetize all the active users/eyeballs scanning the newsfeeds.

Another important metrics, monthly active users (MAUs) showed a similar 8% increase in March at 2.38 billion. MAUs measure of the size of the global active user community on Facebook. Here too, Asia drives the bulk of the growth.

These metrics don’t include the rest of the Facebook “family” either. An estimated more than 2.1 billion people now use Facebook, Instagram, WhatsApp, or Messenger. Around 2.7 billion people use at least one of Facebook’s family of services each month. These 2 billion+ audiences are assets unto themselves. All investors have to do is be patient as Facebook generates more ad revenues and in-app revenues.

The Bottom Line on Facebook Stock

Overall, Facebook had a very strong quarter. Everything is pointing to an even better second half of 2019. The FTC probe is not completely behind the Company, but the brunt of the damage seems to have been done, financial and otherwise. FB isn’t going anywhere anytime soon and probably isn’t going to get broken up by a regulatory body so long as they keep up their cooperative attitude.

Facebook stock has the potential to get to new highs as the company delivers betters growth numbers in the coming quarters and puts the regulatory overhang to bed.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 195.18.

The projected lower bound is: 177.96.

The projected closing price is: 186.57.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 25 white candles and 24 black candles for a net of 1 white candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with FACEBOOK INC A), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 31.4379. This is not an overbought or oversold reading. The last signal was a sell 14 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 53.15. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 6 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -97. This is not a topping or bottoming area. The last signal was a buy 0 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.

Rex Takasugi – TD Profile

FACEBOOK INC A closed up 5.540 at 186.270. Volume was 10% below average (neutral) and Bollinger Bands were 6% narrower than normal.

Open High Low Close Volume___
180.420 187.280 180.020 186.270 16,746,904

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 188.67 177.72 161.24
Volatility: 33 31 41
Volume: 14,729,247 17,509,316 23,089,784

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FACEBOOK INC A is currently 15.5% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of FB.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on FB.O and have had this outlook for the last 30 periods.

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