Facebook, Inc. (NASDAQ:FB) stock seems invincible
Facebook (NASDAQ: FB) faces billions in fines ahead and yet the stock is in a sustained uptrend. Though Facebook stock nearly traded above $200 a share in early May, the bulls backed down in recent weeks. What will it take for the stock to trade at $200 or more? Valuations are not excessive at 27 times earnings. The forward P/E is even more compelling at 19.4 times.
The lift in Facebook’s competitors might explain why FB stock is trending higher despite the billions it will soon pay the government. Snap Inc. (NYSE: SNAP) is up 110% in 2019 so far. The company reversed its disastrous app refresh, which resulted in a return to higher usage.
It is adding content to keep user time spent on the app. For example, Snap updated Trending Topics. Twitter, Inc. (NYSE: TWTR) topped over $40 a share before settling recently at $37.41. The company is experimenting with increasing ad impressions relative to the content shared.
Facebook’s $3 Billion Fine
In March, Facebook booked a $3 billion charge related to its settlement with the FTC. In relative terms, the charge is almost a rounding error when compared to the $15 billion in quarterly profits.
Losing user trust is Facebook’s real risk and yet markets are too complacent over this settlement. Facebook violated COPPA, a rule governing how children see advertising online. This could increase the fine, especially with the FTC delayed due to a bipartisan split.
Realistically, if Facebook’s fine increases, the stock may fall but will eventually recover. The company’s advertising revenue growth is so strong that it may absorb any one-time costs.
User-Privacy a Low Concern for Users
Users are mostly complacent with their privacy. If they had any concern at all, they would leave the site en masse. Instead, usage hardly changed. Plus, Facebook owns WhatsApp, and Instagram and usage are growing for both apps.
In Q1/2019, Facebook said around 2.7 billion people used Facebook, WhatsApp, and Instagram. Stories on all three sites topped 500 million daily active users. And Facebook is learning from its experiences from the Cambridge Analytica privacy breach.
WhatsApp will have more security and privacy than ever. This includes end-to-end encryption, with users getting more ways to interact on top of that.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 190.86.
The projected lower bound is: 174.39.
The projected closing price is: 182.62.
A black body occurred (because prices closed lower 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 27 white candles and 22 black candles for a net of 5 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 40.3111. This is not an overbought or oversold reading. The last signal was a sell 23 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 46.89. 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 15 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 -51. This is not a topping or bottoming area. The last signal was a buy 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 15 period(s) ago.
Rex Takasugi – TD Profile
FACEBOOK INC A closed down -2.120 at 182.190. Volume was 28% below average (neutral) and Bollinger Bands were 22% narrower than normal.
Open High Low Close Volume___
183.500 184.560 181.350 182.190 12,797,685
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 183.99 180.29 161.47
Volatility: 29 29 40
Volume: 11,647,150 15,729,345 21,978,934
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 12.8% above its 200-period moving average and is in an downward 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 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 7 periods.
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