Facebook, Inc. (NASDAQ:FB) is set to unveil its second-best results this week, despite a privacy ruling and fears over Libra
Facebook is expected to report its second most profitable quarter ever on Wednesday, even in the wake of a $5bn (£4bn) fine and an unprecedented level of scrutiny over its plans to launch a new global currency.
While regulatory struggles and digital money plans have hogged the spotlight in recent weeks, investors and analysts remain convinced that the social media juggernaut can continue to expand.
Facebook’s share price has risen by more than 50% this year, more than double the rate of increase on the broader Nasdaq composite index. Investors have shown a remarkable stomach for unpalatable news: in April they shrugged off the $5bn hit from the US Federal Trade Commission over privacy violations. Shares are about 8% above their level on 16 March 2018, on the eve of Observer revelations that Cambridge Analytica harvested millions of user profiles to target users with political advertisements.
Neither does the company yet appear to have been affected by the backlash against Libra, the digital currency it hopes to launch across the world. Regulators and politicians – from US Democratic presidential candidates to the Bank of England’s Mark Carney – have promised to make Libra one of the most heavily scrutinised technology launches in history.
Mark Zuckerberg, who founded the firm 15 years ago, appears to be so concerned by the wave of controversies that he launched a set of hour-plus podcasts to discuss topics such as free speech, democracy and the law.
Yet despite setbacks, investors are expected to focus on the more prosaic realities of user growth and revenues when Facebook reveals results after the market closes on Wednesday.
In those results, Facebook’s rising revenues – up by 30% year on year to $16.6bn – mollified investors who had been spooked by research suggesting that US and European markets might be reaching saturation point. Facebook estimates it has two billion daily active users of at least one of its “family” of apps – Facebook, Instagram, Messenger and WhatsApp.Advertisement
However much sound and fury it faces in the political sphere, Facebook’s potential to keep on reaching new users in emerging markets such as India has pushed its valuation to above $570bn in recent days – back towards the high-water mark of $624bn hit a year ago. Analysts will be on the lookout for growth in revenue per user in markets that are still expanding at a rapid clip.
It may not all be plain sailing. The potential for a jolt was underlined last week by Netflix, after the streaming service, also listed with Facebook on Nasdaq, fell short of its own forecasts for new subscribers, according to Alex DeGroote, an independent media analyst.
“Investors may now just be thinking, ‘We’ve had an extremely good ride; let’s press the button [to sell] and take stock’,” he said.
Facebook executives had guided the market to understand 2019 as a transition year, with lower revenues and higher spending as the company reorients towards more visual advertising formats such as its Snapchat-esque “Stories” features and spends more on human editors to combat fake news.
“They [tech firms] do hit speed bumps, and sometimes it can be quite abrupt,” DeGroote said.
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 189.46.
The projected upper bound is: 208.73.
The projected lower bound is: 188.34.
The projected closing price is: 198.54.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.
An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend (which appears to be the case with FACEBOOK INC A). It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend, it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.
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 22.7248. 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 56.93. 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 4 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 5. 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 sell 0 period(s) ago.
Rex Takasugi – TD Profile
FACEBOOK INC A closed down -2.420 at 198.360. Volume was 29% below average (neutral) and Bollinger Bands were 10% narrower than normal.
Open High Low Close Volume___
202.180 202.330 198.070 198.360 12,098,262
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 201.25 187.18 164.85
Volatility: 22 36 42
Volume: 13,834,048 16,194,410 20,846,964
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 20.3% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 20 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.
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