If there’s been one question I’ve been asked more than any other over the last 48 hours, it is this: “Does the current buying or stabilization in Facebook™ share price signal that the worst is behind them?”
My answer: “Absolutely not, and I feel is immaterial in relation to what Mark is both saying and being asked before congress.” Here’s why…
Currently, the only think that matters to the “markets” is that Mark doesn’t say something entirely crazy, or that something akin of his face falling off and revealing that he is indeed an android that everyone across the media spectrum has associated his demeanor and responses to. Obfuscation, Gee-golly-whiz, We’ll do better, and more type responses are totally within the confines of chalking it up as a win for the moment, as far as the “markets” are currently concerned.
What is frontmost and in direct sight for the “markets” is the only thing that truly matters. i.e., To be positioned, or have exposure for their April 25th earnings report.
That is it.
As long as Mark doesn’t do, or say something so egregious that impels congress to have him led out in iron chains – it’s a win for the “markets” at this moment. Again, and that’s all that matters. i.e., This moment before earnings.
Everything else will be dealt with the moment after the release, and earnings call. Only then will you see the result of what the “markets” have interpreted for the likes of Facebook and others of its ilk going forward. Hint: I think personally the “likes” are not going to be forthcoming after the call, but that’s just me.
All this outcry and revelation about Facebook’s business practices and more do not (at least in theory) effect its latest earnings report. Remember, Facebook was riding a valuation with a share price closing in on $200. The distance between where it is now (in the $160’s as I type this) and where it was before all these revelations is just the type of set up for the all too typical short squeeze play that the HFT’s love to feast on. And the prospects of Facebook having an upside surprise during the last quarter are at the least a 50/50 proposition. So looking at the price action steadily rising off of its most recent low as we head towards earnings, in my opinion, is not a vote of confidence by any means, just a positioning play into earnings. Nothing more.
Again, where the real tell will be for Facebook going forward (and all of them I might add) is what happens directly following the April 25 earnings call. That’s when you’ll get your real first glimpse of just how tainted the entire “ads for eyeballs” model along with its purveyors are. For as I have said from the beginning:
The moment Facebook’s earnings are brought under any light that shows any type of slowing, for whatever the reasoning, coupled with its current share price that’s for all intents and purposes “priced for perfection” on the assumption that there is only growth going forward? It’s over. Period.
Just like it was for AOL™.
And for those who like to use the argument of “Yeah, but they still have 2 Billion users!” Remember this…
No one had more users than AOL at the time, nor Yahoo™, and how did all that work out?
Think about it.
© 2018 Mark St.Cyr