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Thursday, May 30, 2013

developments in Facebook

Apparently Facebook took it on the chin with a few advertisers due to some hate filled pages. So-much-so that advertisers walked away until the issue gets resolved.

Was this the underlining reason the stock has declined some 20% in 2-3weeks? Could be, assuming the loss of advertisers correlates to a meaningful loss of revenue/earnings. But the trading dynamic still smells like a liquidation. Although, at this stage of the game, and after a very decent earnings report, I am confused as to why the liquidation is taking place.

Without understanding the reason for the decline, melting through some pretty heavy and obvious support levels, I am failing to understand the trading dynamic at the moment. Without understanding the decline, I will be hard pressed to understand the catalyst to turn the stock. (It melted through resistance levels that should have produced a bounce given its technical set up, but nothing of the sort took place.)

In the mean time, I will continue to keep my eyes open.

A closer look at the revenue trends did not show anything atypical. Historically FB typically sees a slow down in the March ending quarter. Year over year they grew fairly nicely, almost 40%. The only knock could be the revenue growth being linear vs exponential.

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