Stock (Symbol) |
Facebook (FB) |
Stock Price |
$159 |
Sector |
| Technology |
Data is as of |
| March 24, 2018 |
Expected to Report |
| May 1 |
Company Description |
 Facebook, Inc. is a social networking company, products include Facebook, Instagram, Messenger and WhatsApp. The Facebook mobile app and Website enables people to connect, share, discover and communicate with each other on mobile devices and personal computers. Messenger is a mobile-to-mobile messaging application. Instagram is a mobile application and Website that enables people to take photos or videos, and share them with friends and followers. WhatsApp is a mobile messaging application and allows people to exchange messages. Source: Thomson Financial |
Sharek’s Take |
 Facebook (FB) is in the news for allowing another company to access user data. And honestly, FB has more data on us than we know. And they sell it. When you click on an app that puts a cute “what were you in a different life” on your wall, you’re giving these companies access to things like your photos and your friend list. So don’t click on the outside apps if you don’t want that data out there. This stock fell from $185 to $159 since the news hit (one week of trading days). When it went through $171 it broke the 200-day moving average, which is a bearish sign and a sell signal. The volume last Monday was the highest daily volume in FB since April 2016. Smart money (including myself) bought in July 25, 2013 when the stock jumped from $27 to $34 that day. The stock hit an All Time high of $195 just last month. So there’s a lot of people looking to take profits. The money managers who got in at $34 not only have good profits in the stock, but we need to sell pieces to invest in other new ideas. Because many of our other stocks haven’t done this well, so FB is a larger portion of the portfolio. Another reason to take profits is if you have a great stock like FB and it’s 10% to 20% of your portfolio, if it goes into a deep decline it’s dangerous to double-up. So if you bring that position down to 5% you can always make it 7.5% if it falls. I’ve been selling pieces of my Facebook position for a while now. I think it’s due for a correction. For the stock to rise, it needs buyers. And if you like FB stock — you probably already own it. I’m still bullish on the stock, and my 2018 Fair Value of $202 gives the stock good upside, but I continue to take profits. |
One Year Chart |
 Here’s what last week’s decline did to the one-year chart. Note $160 used to be resistance and now its support. If you look at last qtr’s report you see a perfect one-year chart (which don’t last). Last week FB fell through the 200-day moving average (not shown) so it’s technically trending down. Last qtr’s profit growth was a robust 57%. Sales increased 47%. The company whipped estimates of 38% growth. But Estimates for the next 4 qtrrs are for +5%, 24%, 13% and 10% profit growth the next 4 qtrs, but FB has been beating the street. Analysts have an Estimates Long Term Growth Rate of 27% on the company. And a P/E of 22 is a good price for that type of growth. |
Fair Value |
 My Fair Value P/E declines from 32 to 28. Profit growth is expected to slow from 46% last year to 18% this year. Management has been whipping profit estimates for a while now, so I feel the company could grow profits 25% this year. My 2018 Fair Value is $202 this year and $247 next year. |
Bottom Line |
 Facebook was extended on the ten-year chart and now that it’s declined, it’s back in line. Look, these companies like Facebook have data on us, but they have the best apps, including Instagram and Whatsapp. FB is in a correction now, and looks good long-term. Last qtr I pointed out the stock could be in for a correction in early 2018, and here we are knocking on the door. FB drops to 4th last qtr to 6th this qtr in the Growth Portfolio and Aggressive Growth Portfolio Power Rankings and from 1st to 2nd (since last qtr) in the Conservative Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
6 of 39Aggressive Growth Portfolio 6 of 16Conservative Stock Portfolio 2 of 35 |
