Facebook, Inc. (NASDAQ:FB) Here Comes the Ads

Facebook, Inc. (NASDAQ:FB) Here Comes the Ads

Facebook, Inc. (NASDAQ:FB) Here Comes the Ads

If it seems like there are a few more Instagram stories of late, you’re not imagining things. There are. Chief among them is the replacement of the company’s now-former CEO Kevin Systrom with Facebook insider Adam Mosseri, though the exit of Instagram co-founder Mike Krieger is just as noteworthy. Though their exit appeared amicable, Systrom recently acknowledged his resignation wasn’t exactly his choice.

Why would Facebook let the integral pair walk away? Speculation on the matter has abounded, but the most obvious answer is also the most correct one – Facebook CEO Mark Zuckerberg wants a bigger, better bottom line from his 2012 acquisition.

The first item on the checklist: More – and more fruitful – ads popping up in the middle of Instagram chats, starting with the “Stories” feature ; Stories is a pretty blatant ripoff of Snapchat’s shtick.

What this will look like still isn’t entirely clear, as most consumer-oriented outfits are forever tweaking their product. But many onlookers are worried that Facebook will make the mistake of overreach. One Instagram advertiser opined, “I think, historically, Instagram would have [prioritized] the user experience, but the pressure will be on to [monetize].”

Facebook isn’t unaware of that risk either.

Carolyn Everson, Facebook’s vice president of global marketing solutions, recently explained : “We have every incentive, in our bones, to have Instagram have a unique value proposition and not have it just become a replica of Facebook. That would completely destroy its value, and so that’s completely the opposite of what we intend to do.”

Nevertheless, sweeping changes remain in the queue. A feature called ” school communities ” will let students attending the same college connect with one another, “Nametag” will turn a profile into a QR code. Other improvements and additions are just a thought away.

Make no mistake, though: the end goal is to draw a bigger crowd that ultimately leads to more ad revenue. The line between decent profits and overwhelming exposure to advertising is a fine one, though, and few companies have been able to consistently walk it.

On the other hand, the math thus far seems to add up.

Crunching the Numbers
Facebook desperately needs whatever it does with Instagram to pay off – and fairly soon. The good news is, it likely will… at least initially.

Facebook doesn’t offer up a great deal of detail about where its revenue comes from. KeyBanc Capital Markets analyst Andy Hargreaves offered up some estimates, however, and believes roughly 15%, or $2 billion of the previous quarter’s $13 billion worth of advertising revenue was supplied directly by Instagram.

That’s not much, even If Instagram grows great guns from here. Current and would-be owners of Facebook stock may not fully appreciate just how much growth may be in the cards, though. Hargreaves believes Instagram could account for roughly a third of Facebook’s ad business within a couple of years, translating into 70% of Facebook’s revenue growth for that timeframe.

It’s not a difficult projection to embrace, given the decided success some advertisers have already seen with Instagram compared to Facebook as an advertising medium. Its per-click prices are falling , and consumer responses are more fruitful than Facebook’s for many companies using the relatively young platform. Marketing Land and Search Engine Land reported in July that ad spending at Instagram grew 177% year over year in the second quarter, while Facebook’s take was essentially flat.

There’s a reason advertisers are choosing Instagram over Facebook.

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 170.20.

The projected upper bound is: 160.93.

The projected lower bound is: 145.14.

The projected closing price is: 153.03.

Candlesticks

A white body occurred (because prices closed higher 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 24 white candles and 26 black candles for a net of 2 black candles.

A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

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 37.9480. This is not an overbought or oversold reading. The last signal was a buy 4 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 35.13. 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 buy 25 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 -89. 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 down -0.220 at 153.520. Volume was 39% below average (neutral) and Bollinger Bands were 26% narrower than normal.

Open High Low Close Volume___
153.320 155.570 152.550 153.520 15,433,521

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

Moving Averages: 10-period 50-period 200-period
Close: 156.51 168.14 179.13
Volatility: 33 30 45
Volume: 26,019,034 24,897,566 27,735,796

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 14.3% below its 200-period moving average and is in an downward trend. Volatility is Our volume indicators reflect moderate flows of volume out of FB.O (mildly bearish). Our trend forecasting oscillators are currently bearish on FB.O and have had this outlook for the last 16 periods.

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