Its revenues in 4Q12 over 3Q12 revenue growth is 25% vs. 3Q12 over 2Q12 growth of 6.6%, which is impressive (also better than its 4Q11 over 3Q11 revenue growth of 22%). Since FB incurred large amount of stock compensation last year when the IPO was issued, such huge expense would not incur in 2013. Therefore, the earnings in 2013 would be much better in comparison to 2012. Although it is highly overvalued, it still has good growth potential. The more important thing is, financial institutions would not let their money sit in FB as dead money (institutional holding is 47%), they must do something to pump up the stock again. Note that institutional holding increased 24% from Oct 1 - Dec 31, 2012.
Accumulate? Really??? I do want shares of FB, but it seems it hasn't found its bottom. I have a limit set @ $25.45. If it hits, then I'm in. Otherwise I'll what and when it starts to move up again then I'll buy.
Simply put there is only negative guidance out there right now, and no one is selling at this price unless they got in early. Those folks have pulled out, and the rest are selling for tax season.
Once we are into April there is a very good chance that the stock will steadily rise on more volume with tax refunds and earnings on the way. It's hard to imagine worse guidance than that was given last time around, and for the stock to fall further would require a major analyst downgrade.
Why sell now? Does anyone really believe there will be a wild miss at next earnings when expectations are now already pathetically low? Why sell at $24 or $25 now, when clearly there is at least a 50/50 chance for a steady move up in April into earnings.
With the worst guidance, the worst executed IPO, the worst likability of any stock of all time, and the worst CEO and COO support of a stock price in history, FB is still selling at near the initial IPO price. Yes, there is a chance that it will fall further with the H&S pattern. But there is also a very good chance that it is now oversold, and that new buyers are going to move on now that earnings season is coming around. The daily selling pattern just makes no sense out of the tax season and Passover holiday context.
The time for speculators to start buying is approaching.
(respectful) REBUTTAL TIME: five (counter-) points...
1) "... 4Q12 over 3Q12 revenue growth is 25% vs. 3Q12 over 2Q12 growth of 6.6%..."
-- investors are forward looking; that comp is old history and not relevant. growth based on a company that previously had NO mobile strategy. can FB "sustain" rev growth to justify valuations going forward?
2) "...stock compensation last year when the IPO was issued, such huge expense would not incur in 2013..."
--already factored in. AND DON'T FORGET zuckerberg has been warning about increased operating expenses from this year's product rollouts and expansions. (will weigh heavily on earnings. whether or not expansion is effective will still be in question.)
3) "Therefore, the earnings in 2013 would be much better in comparison to 2012."
--given points (1) and (2), this could make for tougher comps!
4) "Although it is highly overvalued, it still has good growth potential."
--you sure about that? the key word: "POTENTIAL;" the questionable word: "good." where does the growth come from, foreign? the valuable growth comes from domestic (usa). check the ARPU stats (avg rev per user): foreign brings in only 1/7th of domestic. domestic user growth under pressure. ESPECIALLY THE ALL IMPORTANT YOUTH! youth are abandoning facebook in droves for a variety of reasons (including new and more tailored competition, and the "fad factor").
5) "The more important thing is, financial institutions would not let their money sit in FB as dead money (institutional holding is 47%), they must do something to pump up the stock again. Note that institutional holding increased 24% from Oct 1 - Dec 31, 2012."
--YOU ARE RIGHT-- ANOTHER DOWNSIDE RISK. looking at the chart, the avg pps in Q412 was (generously) $22-$24. if sentiment changes, institutions may get out; the first to get out salvage their gains realized since Q412. THIS COULD RESULT IN SELLING PRESSURE ON PPS.
CONCLUSION: FB stock could be "revaluing" itself.
Thanks for the detailed points. I would take them into consideration and watch the price movement closely to determine if I should keep or sell my stocks. In the near term, I think the stock has more uptrend than down trend and would like to hold on for some time.
"CONCLUSION: FB stock could be "revaluing" itself." the new range could well become in the neighborhood of $21-$24. [DISCLAIMER: I HAVE BEARISH CALL SPREAD WITH LOWER STRIKE OF $25.5, so yeah i am short for about a week, but not as short as i think this thing could go.]
You cant make quarter over quarter comparisons because the business is seasonal. (4th quarter is the best quarter in the season.) Make year over year comparisons. The stock compensation expenses were due to newly issued shares and this year per the conference call they will issue many new shares. There will be a lot of share based expenses this year. This is not bull bear argument.
Thank you. I did not mean to omit year over year comparison. I assume the 4Q12 over 4Q11 revenue growth of 40.1% and full year 2012 over 2011 revenue growth of 37.1% are the basic things investors should have noticed. I just take a closer look at the sequential quarterly growth also.