I’ll admit it. I’m guilty and I might have a problem. I have a Facebook (FB) problem. I’m the one creeping on photos of your friends, stalking your activity and chiming in with trollish comments whenever I get a chance. Luckily I’m not one of those people that checks in everywhere they go or tags a million people in every photo or even post photos. Really I use it to put up funny stuff and sprinkle in some self-depreciating humor every once in a while.
I remember the day of the Facebook IPO as a broker. Heck, I remember when Facebook first began as a clandestine website for college kids. It was supposed to be the coolest thing ever. You can send messages about keggers and all sorts of stuff. Maybe that led to some of the bias against the stock when it first went public. Rightfully so as we really had no idea what was to become of Zuckerberg and his baby. Most of us still don’t have any idea. We just know the Winklevoss twins as the biggest tools in the shed. (Give those guys a break, will you?)
Well Facebook today is more than a website you check out when you want to embarrass your friends or see if your hot neighbor will accept your request. It’s an online juggernaut with 864 million daily active users around the world and quarterly revenues topping $3.2 billion and today’s Bull of the Day. Most of this revenue comes from advertising. But Facebook is becoming much more than a website and mobile app. It’s also branching out into other business like virtual reality gaming with the Occulus Rift. In Columbia Facebook announced its providing free internet access. This company has gone a long way since NASDAQ’s foul up on the IPO date.
Some analysts have become increasingly bullish ahead of the upcoming earnings report on January 28th after the market close. Perhaps rightfully so given the recent track record of earnings surprises. Prior to earnings coming in line last quarter, Facebook had two consecutive beats by an average of 5 cents each time. The recent upward revision on earnings so close to the reporting date has helped push Facebook to a Zacks Rank #1 (Strong Buy).
Remember shortly after the IPO date when Facebook shares tumbled? It wasn’t until September 2012 that shares found a bottom. Since then, however, the stock has been on a tear, leapfrogging resistance and hitting fresh news highs. Since September 2014, Facebook has begun to consolidate a bit and carve out a range in the $70s although it did pop up just north of $80 on a couple of occasions. But for the most part, $72 to $80 has been the bookends of recent trading.
With the 20 day moving average tracking horizontal you should be looking for opportunities to enter Facebook near the bottom end of this range when you get an oversold condition in the stochastics, commodity channel index, or a similar overbought/oversold indicator of your choice. This scenario seemed to play itself out today with FB bouncing off of support at $73.54 in Thursday’s trading. The light volume is a bit troubling but a quick scalp may be there to be had ahead of earnings in a couple of weeks.