The shares will not be similar to BRK A or BRK B shares except they will be listed seperately. BRKb shares were an offering very much like a secondary. BRKB shares represented 1/30th of a normal share where as FB C shares will represent the same ownership of the company but the difference will be the voting rights. This should structurally similar to the GOOG and GOOGL split/dividend where the prices are very similar to each other.
The way FB split/dividend is being structured initially has to have the price the same. This is not a secondary it is a stock dividend and it has been called both a split and dividend. The creation of a new class of shares means that it has to follow something very similar to GOOG and GOOGl. Other than the numbers this is exactly what is happening. Even without the actually share holder meeting, this has to follow rules and the market will determine the price of the shares based on how much more they believe that the stock with voting rights is worth than those without. Based on the current price and the history of Google's split/dividend, it looks like the difference should maybe be a couple of bucks.
The one part that you have to understand is that even with a limited history there is no way for FB to set a price on this. (They would have to offer it to the market to set a price). So all shares will be roughly 1/3 of the price of FB just prior to the split.
With GOOG and GOOGL as history, the split will not do much to the stock either before of after the split/dividend. Stocks like AAPL and NFLX had appreciation or depreciation of their price due to the split. The split will probably do nothing to the price of the stock but that is not really important because the bottom line is that FB can do well based on how they perform. I would not look at the split as an event that will do much for the stock but if you have a bullish perspective I would look for the stock to continue to do well.
This will be very much like Google's stock split/dividend. For every contract you have, you will receive one contract of a non-standard deliverable. After the split/dividend, if you excercised your options (non-standard deliverables) you would receive one class A and 2 class C shares. All three shares would add together to determine whether your option is itm or otm.
These options may have less demand after the split if they are otm because people will most likely buy the new options they understand. If your option is itm, then there will be intrinsic worth so the option will be priced to reflect that.
GOOG after its split was 568 . 2 years and 2 months later it is 704. That is about a 24% gain or about a10% annualized gain. Okay gain? yeah, I guess but nothing to write home about. This fairly small increase is due to Google's performance not the split. If you look six month before and after GOOG's split, it was quite flat. The split did absolutely nothing for GOOG
What will it do for FB?........Most likely not much. FB has been doing well based on its performance and the stock will continue to do well if FB continues to perform.
Stock splits are not what they used to be.
Its basically a flag without any coils.
The CH only has a depth of about $8.00 and it has broken well above the rim of the cup before it formed the handle. This is really just a basic breakout with a retrace. Also if we are looking at a Bill O'neal classical pattern we could expect a rise of maybe half the cup size which would around $4.00 and it already went well past that before it retraced to make the handle. A deep bowl means a large breakout.
Besides that most of these patterns are at best 50% and you used to be able to hang your hat on certain patterns such as the C&H but it really is not the case now. You can look at the longer term trend and that is a better indicator.
With that said, FB is going up quite nicely and will continue to but it is no longer a momentum stock.
Its only a little over a $100 stock and $100 is the new normal so anyone who wants solme can get it.
If we look at past splits like GOOG, AAPL, and NFLX, there was no rise 6 months before or after the split. Everything has been performance based and the same goes for FB. FB will do well if it performs well and the split will basically be a non factor.
Okay lets do an example and this will be easier. You sell a put at a strike of 115 for $2.00 and lets say the stock is at $117. If the stock goes up the put becomes worthless and you keep the $2.00.
Lets say that the stock goes down to 113. If you sell a put, you sell the right for someone to put the stock to you at the strike price. In this scenario, someone could put the stock to you at $115 and since the price is $113 in our example, this means you are paying $2.00 more than the stock is worth. It sounds bad but you made a $2.00 premium and you bought at a low point.
The greater theory is this. If someone is bullish on stock but would like to add to their position, they can sell puts. What if FB went down to a $100? In our example, you would have to buy the stock for $117. That's pretty bad right? Consider this:.......if you were planning on adding to your position and lets say that you bought shares at $117 and you keep holding, you just lost the same amount but the put seller had $2.00 better.
What do you need to sell puts? You need the enough cash in an account or margin account to buy the stock. Unless you have a level 4 approval which is not easy to get......We wont go into that now.
I am just presenting this because we have to make our investments or trades around our convictions and I am presenting another way to trade. That's all it is. The bottom line is if a person is planning on buying a stock as the stock is falling, selling puts makes sense and is better by the amount of premium if the stock goes down. Hey, if the stock goes up they get to keep the premium,
I hope this helps.
No selling puts and buying puts are two different things. If you buy puts, you want it to go down.
If the stock goes up you keep the premium. That is ideally what you want to happen. Because you are saying you would like to "add to my position so might as well at a cheaper price", I am saying that selling puts helps you do this "if the stock goes down".
If the stock goes up, you keep the premium. Selling puts is bullish.
If your holding and you want to add to your position, you may consider selling puts. If FB goes up, you keep the premium. If FB goes down, you are able to buy at a lower basis.
For instance if you sell a 115 strike put and get $2.00 premium, then your basis is 113.00. I am saying this not push selling puts but if a person is buying on the way down it is a good way to add to the position.
There are some overlaps between FB and GOOG but for the most part they are really not in competitive areas. FB does not really move by taking share from GOOG. It will move based on building its own products like social media.
GOOG is on its way to having 100 billion in rev so at this point there is no ill affects. Facebook's growth is not dependent on taking market share from GOOG. Its fun to look and media is also sometimes incorrectly hyping this `with superlatives in their titles. Bottom line is the majority of GOOG's income is search and the majority of Facebook's income is social media. They will compete in some venues and they seem to be rivals but at least right now Facebook wont eat Google's lunch until they take search rev away which wont happen anytime soon.
Most recent history suggests that splits don't make a lot of difference. If you look at NFLX, AAPL, GOOGL to name a few. The good news is that performance does affect the stock and FB is doing well so its share price will do well if it continues.
Those ought to be good especially if you have a lower basis.
They are killing the weekly's right now. Its a tough game.
I am in back spreads right now.
It delayed a few months but I traded GOOG at that time and there didn't appear to be much affect on the price. It's always hard to say for Facebook. It may be only my opinion but i don't believe there will be an adverse drag on the price due to the lawsuit.
No there are actually a lot of major players taking that market and only about 225 billion is online advertising and of that Facebook and Google are collectively taking less than half of that. There are actually many players. The thing is Google is growing quite robustly. Maybe not as much as Facebook but that is immaterial. The Facebook is eating Googles lunch so it will soon be twice Google is not valid. There is a finite amount of advertising and there are much more than two players in the advertising field. FB will continue to grow but so will Google.
There was a lawsuit with the GOOG split and it seemed to go through okay. I really don't think the lawsuit will hold back the stock price. Sometimes it is just hard to watch the stock move slower than it did a few years ago. If we look at the gains in one hears time it is around 45%. It is still moving up and will likely continue.
FB is splitting or offering a stock dividend but whatever you call it the net effect is the same. You keep one share of Class A stock. You will receive 2 additional class C shares for every Class A share that you currently have.
There is no date set. This will not be voted on until late June.
If we look at some recent splits, the stocks that split like GOOG, AAPL, and NFLX had no appreciable affects from the splits. NFLX and AAPL have done nothing after their split.
For NFLX, its share price is lower than it was immediately after the split. GOOG and GOOGL are actually a bit higher but the performance of the stock has been very good. It had about 8 months of pat trading.
FB has done well and you can expect the share price to increase if it continues to do well. The split, at least if past history is an indicator, will do nothing. It will be all based on how FB performs which has been stellar.
You cant multiply a GAAP derived number by a non-GAAP derived number to obtain a valuation of a stock. There is no such thing as a current multiple. What you call a current multiple is a trailing PE.
Often we speak of a forward PE as a multiple because if the forward numbers are achieved they wont define a PE. Why is this?...........You might ask.
The trailing PE is based on GAAP numbers which are actual. $4.52 is based on non-GAAP numbers. non-GAAP numbers do not take into account many costs like currency, stock and option awards, one time hits, ect. The difference is actually substantial. If they actually gave numbers on non-GAAP basis, you could use the numbers to give a future assumptive value of the stock. I would be careful of that because after everything FB is a growth stock not a value stock. Its value is derived from growth not comparative time valuation.
If you want to look at share price growth over the last year, you can see that the average price about a year ago was in the low 80's......Call it 82.00. Share price growth=119.49/82=1.457 or 45.7% growth. Revenue growth for 2015 was 43%. Due to costs increasing earnings growth was slower. From this I would have to say that FB's growth will slightly lag its future growth. Use those numbers for your off the napkin calculation.
Alas FB is not a value stock and the market will base its valuation on the markets belief in Facebook's growth story.