Being a perennial Short or Long in any stock is no different than religion. You have no flexibility, you can't move with the changing world and adapt to new situations. Case in point, I went short 2 days after the earnings announcement, via Jan $21 puts. I was making money all the way down till it totally filled the gap to the earnings announcement gap up. Then gave it all back yesterday, that was the last thing I expected to happen on lockout expiration day. Trust me I was not a big believer in this stock, with it's high P/E, however yesterdays up move on 229 million shares, could only mean one thing, that the big funds moved in to buy this. Not everyone will sell all their shares, but 229 million seems like a reasonable percentage of the 800 million unlocked shares, if not, it looks like the major funds will still be buying up the rest. So, I sold all my puts on todays slight move down. It pained me to give back the gains, and I had hoped there would be a big selloff today, but when that didn't happen, it told me the big funds are intent on accumulating shares. Despite what some had said that the lockout was priced in, is not true, because with out the big funds moving in, this stock would have tanked. This was a calculated move by the funds, deciding not to wait, but instead create a short squeeze, that will start a concerted up move for this stock, as they begin to accumulate more shares. It's also a sign that the funds really believe in this stock, or they got some inside information, because if they had held off from buying, the stock would have gone down, and they could of gotten it cheaper. I will wait a few days, but if a flag pattern, which appears to have started today, is formed, or what some call an ascending triangle, I will go long via calls. I am less concerned about the high P/E, than I am about the the funds moving in and believing in the their confidence that FB can monetize at least for the short term. So, it pays not to be religious...when it comes to stock investing ;-)
BTW, I don't think there was any manipulation. I'm not saying it never happens, but no one can manipulate 229 million shares. That's a million more than earnings announcement gap up. In retrospect, I now realize that's when the accumulation started. I'm kicking myself, as the the down days after that were much lower volume, so I should of sold my puts once that gap up was filled. 228 million gap up on 10/24, and 229 million on move up on 11/14, like it or not this sucker is being accumulated by the big boys. Wait for a flag, and trade the rally.
Finally!!!! Someone who is directionally agnostic and understands how to trade the market, and this stock in particular. How refreshing! Very nice synopsis and insightful assessment of the recent move in this stock. I did the same. I let the stock fall after the big earnings pop and started accumulating January Calls between 21 and 19, I saved some capital in case the lockup expiration would result in more selling and was actually hoping for a further down draft gift, but from the Chart, it appeared that the downside was already baked in pre-event and sure enough, on the 14th, the stock rocketed higher and the calls were deeply in the money. I suspected a bit of a pull back Thursday due to the explosive move on Wednesday and was tempted to sell some of the calls but held on. I agree that the move is not manipulation due to the large float. It's was likely a combination of surprised short sellers covering and institutions and hedge funds accumulating. The chart suggests that momentum should take this stock back to the previous trading range support of around 25.50, so I don't want to trim my long position until around 25. But if the momentum pushes it beyond that resistance, next resistance looks to be in the high 20s, then low 30s. Like you so aptly stated, the growth fund managers and hedgies don't care as much about valuation as they do about speculation and momentum and they have the capital to move stocks far beyond what most retailers like us expect, both on the way down and up. I'm glad there's someone on this board that actually has a similar view. Great call e_orton! I'll be looking for your posts.
I didn't see any more volume on Nov 14th then there was on Oct 24th. To me yesterday and today seemed like a move to let some of the big insiders and VC's get out at $22 and to leave everyone else holding the bag.
It's still a free social media site and you can't justify a $22 share price or even an $18 share price.
The type of volume on 10/24 and 11/14 with a huge up move indicates accumulation. If it was distribution, the price would of gone down. In other word there was a lot more buying pressure than selling pressure, despite the same number of shares changing hands. I agree the P/E doesn't justify the price, but this has never stopped a growth stock form moving to an even high P/E. Like I said the funds know something, they either believe FB wiil monetize in way to drive down the P/E or they are trading this. Maybe they are counting on the money moving out of Apple, Google, and Amazon to flow into FB and others, who knows. It's best not to try to figure out why, but to go with the flow.