Facebook, Inc. (NASDAQ:FB) stock has too many headwinds
User growth is not the end-all and be-all for Facebook (NASDAQ:FB) . Just as Snap Inc (NYSE:SNAP) didn’t crash and burn because its user growth was slipping by a few percentage points year-over-year, Facebook stock won’t rally by 30%-50% because it is is managing to increase its user growth by several percentage points YoY.
And the outlook isn’t either black or white for the internet giant. Indeed, I believe that the most likely scenario for Facebook stock by the end of this year is a decline of around 25%-35% from its current levels.
That’s because multiple negative factors continue to weigh on the company’s results and its shares. I call this scenario “a bear market by (around) a dozen cuts.” Below, I have summarized some of the cuts that are poised to, collectively, badly hurt Facebook stock.
Facebook Stock and Revenue Generation
As Facebook becomes more controversial, some advertisers will jump ship. If marketers are targeting consumers in America, where FB’s reputation is becoming more and more tarnished, why wouldn’t they look to advertise on a less “radioactive” website?
For that reason, I believe that when American advertisers can obtain similar ROI from Facebook and other websites, like Amazon (NASDAQ:AMZN), Snapchat, and Alphabet’s (NASDAQ:GOOG,NASDAQ:GOOGL) YouTube, some of them will start to desert Facebook and advertise on the more reputable websites instead.
The two “cuts” I’ve cited so far may already be causing Facebook’s revenue growth to slow markedly. For example, in the fourth quarter of 2018, its ad revenue jumped 38% year-over-year. In Q1, its ad revenue rose just 26% YoY.
It’s important to point out that many people predicted that Facebook’s Instagram would vanquish Snpchat, but data suggests that the scenario simply hasn’t played out as conventional wisdom expected.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 195.88.
The projected lower bound is: 178.68.
The projected closing price is: 187.28.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 26 white candles and 23 black candles for a net of 3 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 54.0637. This is not an overbought or oversold reading. The last signal was a sell 15 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 54.25. 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 7 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 -46. This is not a topping or bottoming area. The last signal was a buy 1 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 7 period(s) ago.
Rex Takasugi – TD Profile
FACEBOOK INC A closed up 0.720 at 186.990. Volume was 35% below average (neutral) and Bollinger Bands were 13% narrower than normal.
Open High Low Close Volume___
185.050 188.575 185.050 186.990 12,169,267
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 188.12 178.01 161.32
Volatility: 33 31 41
Volume: 14,625,229 17,322,066 22,824,228
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 15.9% 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 31 periods.