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Investors Missing Something with Facebook, Says Fund Manager

Talking Numbers

It was one year ago today that Facebook IPO’ed. Many investors have defriended the stock, sending shares down 30% from its offering price. But could investors be missing something about what moms everywhere refer to as “The Facebook”? One fund manager thinks so.

Lou Kerner is founder of the Social Internet Fund and an authority on all things social media, having worked long stints at Wedbush and Goldman.

Kerner believes the company redeemed itself with its business execution. Here are other reasons Kerner says he’s long:

  • More time is spent on Facebook than on any other site ever on the Internet.
  • 60% of Facebook members log on to the site every day.
  • A year ago, mobile accounted for 4% of Facebook’s revenue. This past quarter, it was 26%. About 15% of users access Facebook only through mobile.

Okay, but what do the charts say?

Abigail Doolittle, Technical Strategist at The Seaport Group and Talking Numbers contributor, believes Kerner is, well, sorta right. She thinks the price may indeed hit $38 or even $48. But it will take about a year or two to get there and it won’t be a pleasant ride.

“What makes it bullish over the long run are the higher lows,” says Doolittle. “This suggests buyers have a little more confidence and a little more information, and will eventually take out the sellers near that $32-level.”

Buy it right now? Not so fast, warns Doolittle.

On the very short term, the stock has been trading in a range known in technical analysis as a symmetrical triangle. Recent movements suggest prices will drop in the stock to $22 or $23, believes Doolittle.

“This is a trader’s stock for 2013. For 2014 or 2015, investors may like it for $42 to $48.”

Disclosures:
Lou Kerner owns Facebook shares.
The Social Internet Fund is a product of National Asset Management.
Affiliates of National Asset Management own Facebook shares.
Affiliates of National Asset Management make a market in Facebook shares.

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