Facebook, Inc. (NASDAQ:FB) blew out earnings, but what can it do to keep growth going?
Back in December, I wrote a piece that pained me to write. I suggested you get back into Facebook (NASDAQ:FB). It pained me because — among the cognoscenti and tech experts around which I work — Facebook is about as popular as measles. Or, given the age of my peers, shingles.
But if it just met earnings estimates when it reported in January, my prediction that Facebook stock would soar would’ve been right. And despite a reputation more tarnished than a disgraced politician’s, FB’s business has not collapsed.
If you listened to me, you have been rewarded. Last month Facebook didn’t just meet expectations, it smashed them. Earnings for the quarter were $6.88 billion, $2.38 per share, on revenue of $16.914 billion.
Facebook did indeed soar, from $141, where it was at when I wrote about it, to a Feb. 11 opening price of $167, a gain of 18.5%.
It’s too late to take that gain, so the question becomes is Facebook still cheap?
In conventional terms, FB stock is now fairly priced. Its price-earnings (P/E) ratio is 22, in line with the market, and you would now be paying 8.5 times last year’s revenue. Its 2018 revenue was up 37.4% year-over-year, plus Facebook has less than a billion in debt … so what’s holding you back?
For one thing, regulators still hate Facebook. The company added government risk language to its earnings report, and those risks are serious.
A German ruling demanding that Facebook stop combining user data from Facebook, Whatsapp and Instagram for advertising purposes is threatening to become a full antitrust crisis. Calls to break the company up under the Sherman Antitrust Act are growing.
In country after country, Facebook is being forced to censor itself by authorities. In India, it’s being told to increase fact-checking as the world’s largest democracy approaches another election. In Australia and elsewhere, it’s being accused of weakening the news media. Russia has forced Facebook to pull links to the regime’s opponents.
Some three-quarters of Facebook’s U.S. users have sought to move away, either by changing privacy settings, erasing the mobile app or just taking a break from the service.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 153.25.
The projected upper bound is: 178.82.
The projected lower bound is: 154.00.
The projected closing price is: 166.41.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 white candles.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 31.0092. This is not an overbought or oversold reading. The last signal was a sell 2 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 64.38. 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 2 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 49. This is not a topping or bottoming area. The last signal was a sell 2 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 7 period(s) ago.
Rex Takasugi – TD Profile
FACEBOOK INC A closed down -1.540 at 165.790. Volume was 51% below average (consolidating) and Bollinger Bands were 87% wider than normal.
Open High Low Close Volume___
167.900 168.300 165.080 165.790 12,811,176
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 163.74 145.04 167.03
Volatility: 68 55 50
Volume: 26,905,012 25,914,756 24,876,434
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.
FACEBOOK INC A is currently 0.7% below its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. 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 24 periods.
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