Category Archives: Facebook

Our official opinion on Facebook stock (and other Social Media stocks)

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At times it may appear we are bearish Facebook stock, but this is not the case.  We simply, with the assistance of our computer algorithms, have the uncanny ability to read the market, and we call it as we see it.

The following is a comment we posted on March 19 (Seeking Alpha) about Facebook, but it applies to all Social Media stocks with negative earnings and massive P/E ratios…

March 19, 2014:

The world’s largest hedge fund took a new position in Facebook last quarter… it’s a testament to where the hot money is going: social media

But with any hot market there is no meaningful measure as to how high it can go. Investors are then left to their own imaginations to come up with the possibilities. This in turn drives the market to new highs, and much money will be made for those who can ride that wave to its end resolve.

At some point however, there will exist a better measure of future profits… be it a slow-down in ad budgets, more meaningful data to measure conversion rates, a disclosure of how many fake profiles are out there, or a new player in the industry which disrupts all of that.

When that happens there will be a top and a very deep correction.

For those investors who either a) want to keep their money in social media for the next several years and/or b) have the ability to know when to cash in profits, this is the right market to be in to retire early.

For everyone else, which is likely the majority of investors in social media, it’s best to stick to the blue chips.

Facebook: Exactly how many active users have a pulse? we may never know…

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One of our programmers told a story about how is 80 year old mother sent him an invite to ‘connect’ on LinkedIn:   This elderly lady unfortunately fell for a well known trap where LinkedIn logs into your email account and collects all of your contacts and indiscriminately sends every one of them an invitation to ‘connect on Linkedin’. You can read about this unethical practice and the class action law suit at the New York Times.

Social Network users:  Quality vs. Quantity vs. Non-Existent

Linkedin no doubt counted this 80 year old mother and each one of her vulnerable, elderly contacts who clicked on an Invite as an actual ‘user’, even though she won’t use the site again (and neither will her contacts). Users acquired under such unscrupulous circumstances would explain the sky-high user numbers Linkedin and Facebook reports each quarter, and would also explain their high valuations.

Facebook also uses similar tactics to increase their user base. Their approach isn’t quite as aggressive, but it’s equally unethical.

This raises the question: What is the actual number of ‘quality’ Facebook’s users?

Continue reading→

Flashing Facebook Quotes

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On April 22nd we witnessed large orders appear then quickly disappear on the Facebook NBBO.  This behavior seems to be in line with what Nanex describes in this post re: Facebook Liquidity.

The depth of the order book is used by humans and machines alike to gauge sentiment and determine how well a market can absorb a large buy or sell order, however when quotes like this are ‘flashed’ often enough, markets can be distorted.

Note that the Market Maker in this case is DirectEdge, whose CEO is a proponent of High Frequency Trading.

All three snapshots of the NBBO were taken within the same 30 second period…

Facebook: key up channel broken

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This is a screen shot (click for full image) of our trading screen showing a very simple regression channel with a few standard deviations (10 min line-break bars) which has defined Facebook’s upward trend since August.  This channel was officially broken yesterday morning (11/25) which, not withstanding a retest of the $46-47 range, should indicate further declines from here.   This is how we would make a human-based decision based on probabilities, but our Facebook Stock Predictor algorithm is typically more accurate than us and ultimately makes the final call.

FB 10 min linebreak chart – clear regression channel dating back to August has been broken (click for larger image)

The Facebook Stock Predictor – now a premium service

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We first launched the Facebook Stock Price Predictor as a public service to showcase our technology to potential clients, and hopefully help out a few investors along the way, including some of our friends and family who were invested in the stock (against our recommendations).  We have had great feedback from our followers and we have enjoyed sharing the signals and exchanging ideas.

It is with mixed feelings then that we are announcing our decision to transform the Facebook Stock Predictor into a private service for paid subscribers.

Continue reading→

Facebook: Exactly how many active users have a pulse? we may never know…

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The Facebook Stock Predictor algorithm generated a SELL signal late in the regular US trading session on 11/6 and we notified our email list members immediately. This was after a Neutral position was maintained for the past 5 trading days – a demonstration of computer-grade patience as the market resolved its slow grind.

Last night our team exchanged bearish ideas as to why the stock price might go lower from here.  One of our programmers told a story about how is 80 year old mother sent him an invite to ‘connect’ on LinkedIn:   This elderly lady unfortunately fell for a well known trap where LinkedIn logs into your email account and collects all of your contacts and indiscriminately sends every one of them an invitation to ‘connect on Linkedin’. You can read about this unethical practice and the class action law suit at the New York Times.

Social Network users:  Quality vs. Quantity vs. Non-Existent

Linkedin no doubt counted this 80 year old mother and each one of her vulnerable, elderly contacts who clicked on an Invite as an actual ‘user’, even though she won’t use the site again (and neither will her contacts). Users acquired under such unscrupulous circumstances would explain the sky-high user numbers Linkedin and Facebook reports each quarter, and would also explain their high valuations.

Facebook also uses similar tactics to increase their user base. Their approach isn’t quite as aggressive, but it’s equally unethical.

This raises the question: What is the actual number of ‘quality’ Facebook’s users?

Continue reading→

Opinion: Facebook Valuations, Analysts, and Monkeys…

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It’s easy sometimes to get caught up in market opinions and forget one of the most fundamental reasons for investing in any asset: buying now with the expectation that someone will want to buy it from you in the future at a greater price.

Beware of analysts pushing stock… and monkeys

It sounds simple enough, but what’s easy to forget is that the price of any asset (real estate, antiques, etc.) is set by markets, not by what you personally believe it’s worth.

Financial instruments such as stocks, commodities, bonds, and their ETF proxies should also be approached with the same level of diligence – that is, to understand what the current drivers are behind prices, and to know how much other investors will feel they are worth in the future.

To answer such questions we rely on a number of widely accepted indicators, such as corporate earnings, advertising, our own greed and instincts, or perhaps what our peers and family members happen to be buying at the time. Many fortunes have been made by this method, and many more have been lost. More disturbingly, a good number of analysts exploit this and write up feel-good stories to convince people into thinking assets will appreciate in the future, right or wrong.

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Facebook Q3 Earnings Commentary: ‘If you can’t get rid of the skeleton in your closet, you’d best teach it to dance’

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How it all began

Facebook’s earnings conference call last night reminded us of that scene in ‘The Social Network‘ when Mark Zuckerberg and Eduardo Saverin argue over  introducing advertising to Facebook..

EDUARDO: It’s time to monetize the site.
MARK: What does that mean?
EDUARDO: It means it’s time for the website to generate revenue.
MARK:  I’m asking how do you want to do it?
EDUARDO: Advertising.
MARK: No.
EDUARDO: We’ve got 4000 members.
MARK: ‘Cause the Facebook is cool. If we start installing pop-ups for Mountain Dew it’s not gonna–
EDUARDO: Well I wasn’t thinking Mountain Dew but at some point–
MARK: We don’t even know what it is yet. We don’t know what it is, we don’t know what it can be, we don’t know what it will be. We know that it’s cool, that is a priceless asset I’m not giving it up.
EDUARDO: When will it be finished?
MARK: It won’t be finished, that’s the point. The way fashion’s never finished.
EDUARDO: What?
MARK: Fashion. Fashion is never finished.
EDUARDO: You’re talking about fashion? Really? You?
MARK: I’m talking about the idea of it and I’m saying it’s never finished.
EDUARDO: Okay, but they manage to make money selling pants…

Zuckerberg ultimately got his way, and things haven’t changed much since then.

The price of Facebook’s shares are directly related to the company’s speed and ability to turn their users into products for advertisers.

While Facebook’s ability to productize their users is not an issue (they have the means and the lack of ethics to do so), the company’s timing is what made the stock swoon during the conference call last night after market hours.

Continue reading→

Facebook: Sell signal generated, but wait for the trend

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After nearly 5 months the Facebook Stock Predictor has generated a Sell signal.

The Sell signal means that, based on historical trading patterns dating back to the stock’s IPO in May 2012, the algorithm has assessed a high probability of further declines from today’s levels.

This algorithm has had a high degree of accuracy to date so we have every reason to follow it, however in this current euphoric upward trend, it would be wise to use caution.

Continue reading→

Facebook: The music has stopped… for now

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For those following The Facebook Stock Predictor you know it hasn’t let you down. You also know that this algorithm has held a long position for nearly 4 months, riding the trend above Facebook’s initial offering price and 116% gain on the trade.

As we said before, we launched the Stock Predictor to help investors and to showcase our predictive trading technology at the same time, but little did we know that the stock would rise to its current levels. With Facebook’s earnings multiples above the norm, it would have been easy to be a skeptic and go short the stock, but our computers kept us in the trade and provided the basis for making some bold bullish calls along the way.

Today (Oct. 22), the algorithm finally generated a new HOLD signal. After confirming the signal we notified our email list members immediately, and our team compiled an analysis of what should come next.

 

Continue reading→

Facebook: who’s buying?

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Update – Nov. 15 – Goldman finally files their 13F for the quarter, and reports that they sold off 1.8 million shares.  You can read their filings on the SEC web site here.

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Update –  Oct. 29:  Goldman still hasn’t filed a 13F for the past quarter.  The 45 day deadline is November 17th.  Looking at their past history they typically file at the last minute, likely to avoid moving the stock against the positions that they are taking. We continue to monitor the filings as they come in.

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We have been crunching statistics based on the recent 13F filings that have been trickling in for the July-September quarter.

13F is a regulatory form that institutions must submit once each quarter disclosing their positions.  Filers have 45 days after the quarter to disclose, and we are on the 21st day so as the filings are submitted and posted, we are starting to see a better picture of which ones are buying, selling, and standing pat on their positions.

NASDAQ shows this data on their site, but it’s not as thorough as proprietary reports (such as Thomson or Factset), so we fill in some of the blanks to get a more complete picture:

Continue reading→

Facebook: One more short squeeze for the road

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Those who have been following our Facebook posts know that our projections have been correct, and our Facebook Stock Predictor has stayed with the trend since June. The algorithm’s long position did not get shaken out on those price drops along the way to today’s levels, including a $5 plummet we experienced last October 8th and 9th which has nearly been erased, climbing back up to the $50 level as of this morning.

Continue reading→

Leaping on to a fast moving train: Where does Facebook go from here…

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We haven’t posted much commentary on Facebook recently, but this is mainly because we are awestruck on the stock’s levitation and our algorithm’s ability to stay with it.

When we first launched the Facebook Stock Price Predictor we wanted to showcase our technology to potential clients, and hopefully help out a few investors along the way. We were hoping that FB would trade in a range that would trigger buy and sell signals on our algorithm that we could publish in real time… but the stock has climbed nearly straight up since June and we haven’t seen any opportunity to post a Sell signal in months. Instead, we just watched our algorithm ride the rocket, posting our opinion at key price levels along the way which, in the end, turned out to be correct each time.

But FB is now oscillating in and around the $50 level, which equates to double the price since June and a good place for a lot of investors to lock in some gains. So the question of the day is: Does FB have more room to run, or could this be the top?

Continue reading→

We’re still riding the Facebook wave, but when will it crash?

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Our Facebook Stock Price Predictor  has been right on the money, and we are freely publishing the signals here for all to see because we hate seeing investors get burned.  This cold-hearted computer algorithm has stayed with the up-trend since the June Buy signal for a 72% gain to date (89% overall since February).

So even though we are on the record saying  we hate Facebook as a company,  these days we are growing to like the underlying stock for 2 simple reasons…Continue reading→

We hate Facebook, but the short squeeze continues (with no sign of letting up)

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Let us be clear:  We hate Facebook.   We hate Facebook for the same reason we hate LinkedIn… both of these social networking sites have:

  1. replaced real human interaction in the business and social world, when really they should be augmenting it
  2. tricked people into providing access to their email inbox and bombard the contacts of those who fall for it
  3. implemented loose (call it immoral) privacy policies… remember: you are not the user, you are the product
  4. have stock valuations that are far above their fair value

Facebook just became a $100 billion (with a ‘b’) company in terms of market cap.  To maintain this high-flying stock price Facebook must find ways to make a lot of money fast, otherwise their holiday party is going to be a real downer this December.   If you’re running Facebook, what do you do with your marginal advertising revenue (disrupted by increasing mobile use) and over 1 billion users?  You monetize every last ounce of flesh out of your user base, and this requires that you do a whole lot of bad things you probably wouldn’t even do to people you don’t like, let alone your own visitors.Continue reading→

Facebook Algorithmic Stock Price Predictor says ‘don’t sell yet’

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Our Facebook Stock Price Predictor algorithm continues to impress.  The June 22 buy signal at $24.60/share has shown an outstanding 61% gain on that one move alone, and the trading strategy is running a cumulative profit of 75% to date.   Last week Facebook had already rocketed to $38.00 and we published this blog post warning to keep hanging on as the algorithm indicated further gains:  [Facebook Stock looking to cheat the shorts – Aug. 22]

So where does the Facebook stock price go from here?Continue reading→

Facebook Stock looking to cheat the shorts

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Since we published our Facebook Stock Price Predictor earlier this year the algorithm has worked beyond our expectations, thanks to our crack team of technicians, theorists, and programmers.  Facebook has been on the market for just over a year so it is difficult to establish clear patterns, but our algorithm has identified at least one and has returned over 70% since inception.

Since their July earnings announcement, Facebook has popped a whopping $13 (50%) , so one would be forgiven for believing the stock is ripe for a correction  (..and, for the record, we think so too based on our research into fundamentals and company risks) however, in today’s algorithmic and mania-driven markets, we’ve learned that the market does whatever it wants to, even if it’s contrary to company fundamentals.Continue reading→

General Disclaimer…

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Intellikon does not recommend short-selling any stock as it is a statistically inefficient method of profiting from trading.  The content contained in this blog represents the opinions of the authors who may or may not hold long or short positions in securities of various companies discussed in the blog based upon the authors’ views. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied solely upon in making investment decisions, ever. It is intended for the entertainment of the reader, and the authors. In particular this blog is not directed for investment purposes at US Persons.