Trade Alert: Facebooking boogie
Facebooked. Facebook took it on the chin, but you can’t judge the Facebook report by its cover. At any rate, this is part of investing and trading. You make your bets, and they don’t always work out in the near-term and you get up and do it all over again. Facebook’s down a couple bucks this morning and it’s my third biggest position and it’s barely been public for a couple months and I’m not happy about that.
But in reality, the company delivered a rather strong fundamental quarter and I’m even more bullish after listening to that conference call than I was before.
Here’s a note from Baird:
Advertising Upside Driven by Sponsored Stories Pricing; Stock Sell-Off Likely Reflecting Lock-Ups. In its first earnings report as a public company, Facebook posted upside on both the top and bottom lines as overall results were better than feared, particularly after Zynga’s weak performance a day earlier. Importantly, we believe the company provided good detail on early traction of its new ad formats and initiatives, and we continue to expect revenue re-acceleration in the back half of 2012 and into 2013.
The stock is probably down today more because of concerns that the company’s going to release more shares on the public in August and I’ve heard a lot of handwringing over that today. I don’t know if the stock will fall further into the August lock up, but I continue to expect this stock to climb towards $100 a share by 2014 or early 2015.
I’ll probably be adding a little bit to my Facebook portfolio today, just using some more common stock. But I’m not going to draw a line in the sand and I’ll leave myself room to buy even more if the stock sells off in August too.
We weren’t betting on a big Facebook quarter as a reason to be in this stock at all, and while I’m not happy about the sell-off today, I do think we can take advantage of it to our benefit two years from now. Mea culpa regardless.
