Today I would like to talk about something I noticed last week.
On the chart we can see that
META
is flirting with the 3 year old support line, starting on the major pivot point on 24 august 2015. I think we have probably reached our bottom around 159$. It is not everyday we get to buy facebook near this support line.
We can see that the stock has dropped in the past 2 months. Why did this happen ?
-Facebook has been in bad news lately because of there possible influence with the US elections.
-The Cambrige-Analytica scandal.
-Less then expected quaterly results.
Now finally the market reacted when they reported less then expected quaterly results and they will put more money towards protecting content on facebook. hiring about 5000 new employees.
This costs money ofcourse. This resulted in losing more then 20% marketshare.
Ok so here is what the market is forgetting in my opinion.
Facebook has;
- 2.2 billion monthly users.
- Has a cash position of over 42 billion
- Had a free cashflow of 17 billion last year.
- is the second largest advertising company in the world.
- It is not a one trick pony ! facebook owns Instagram, Oculus, Messenger and whats app.
- There is more room to grow ! currently they are making 26$ per user in the US and Canada. Now outside of these countries the average is only 5$ a user.
- We are at a support line.
I'm not seeing a increase in the volume however taking these things into account I have been long from 163$.
A possible end of year rally would work in our favour here.