Facebook, Inc. (NASDAQ:FB) multi-year upside is compelling

Facebook, Inc. (NASDAQ:FB) multi-year upside is compelling

Facebook, Inc. (NASDAQ:FB) multi-year upside is compelling

The recent stock market rout has been unkind to hyper-growth glamour stocks, and especially so to Facebook (NASDAQ:FB). The digital-advertising and social-media juggernaut has been plagued by data-protection scandals, regulatory threats, slowing growth, and falling margins, all against the backdrop of a market worried about a looming recession. Net result? Facebook stock has dropped 40% off it’s all-time highs in just 4 months.

But, this isn’t time to throw in the towel. Instead, this recent selloff makes me think of an old Warren Buffett saying: be greedy when others are fearful.

At this point in time, everyone is fearful when it comes to Facebook stock due to a plethora of recent headline risks. But, if you back out and look at the big picture, not much has really changed about the core long term fundamentals of this business.

From that perspective, there’s plenty to like about Facebook stock at its current prices. You could get further weakness in the stock in the near term due to persistent headline risks. But, those headlines will eventually improve, and when they do, this stock will head way higher.

There are two ways to look at the long-term revenue potential of Facebook.

The first is by understanding that between Facebook, Instagram, WhatsApp, and Messenger, Facebook has the opportunity to monetize 6 billion users across all four platforms. While Facebook reports 2.6 monthly users, that number does not count the users who use multiple Facebook-owned platforms. If you add 2.2 billion Facebook users, 1.5 WhatsApp users, 1.3 billion Messenger users and 1 billion Instagram users, the number of total advertising opportunities swells to 6 billion. After all, you can advertise to the same user on both Facebook and Whatsapp.

Currently, Facebook is only monetizing about 3.2 billion of these users (Facebook + Instagram), and are doing so at an ARPU of roughly $17 and rapidly growing.

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 156.33.

The projected upper bound is: 145.68.

The projected lower bound is: 126.05.

The projected closing price is: 135.86.

Candlesticks

A white body occurred (because prices closed higher than they opened).
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 25 black candles.

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 51.0843. This is not an overbought or oversold reading. The last signal was a buy 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 39.21. 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 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 -68. 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 9 period(s) ago.

Rex Takasugi – TD Profile

FACEBOOK INC A closed up 4.650 at 136.380. Volume was 14% below average (neutral) and Bollinger Bands were 2% narrower than normal.

Open High Low Close Volume___
133.000 137.000 132.780 136.380 24,263,640

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

Moving Averages: 10-period 50-period 200-period
Close: 137.82 152.26 173.65
Volatility: 50 42 46
Volume: 27,124,474 26,033,766 27,684,640

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 21.5% below its 200-period moving average and is in an downward trend. Volatility is relatively normal 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 bearish on FB.O and have had this outlook for the last 45 periods.

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