(November 20, 2013) –Pre IPO the public was taking serious smack about Facebook’s valuation. SEC wanted to investigate the offering as a possible fraud. Pre IPO buyers crying about the drop in the stock price when it first opened. PhD Economists and guru stock analysts all put their two cents in about how terrible an investment Facebook is. It’s been a few months and Facebook’s stock price is nothing less that impressive.
You’ve got to pay attention to the world around you. Facebook is a basic necessity these days. Almost as essential as having breakfast. What’s the first thing a person does when they wake up in the morning. Have a coffee and browse Facebook. The whole world is on Facebook. As you go about your day, take a look around. Have you noticed out in public people are staring at their smart phone with a stupid grin on their face? Their probably looking at their Facebook feed.
Traffic is King
In the realm of the internet, those who have traffic aka visitors or members, dominate. Google for example, is a staple for internet search, and it is reflected in it’s stock price quoting in the triple digits. Everyone uses Google to search for content on the internet. Facebook’s appeal lies in the basic human behavior that we are all social creature. We want to be connected to family and friends. The more the better we feel about ourselves. Facebook makes this possible. Facebook is international, and the world is it’s customer. As long as Facebook can maintain it’s traffic it will dominate the stock market.
You need to Do Your Own Homework
If you stop listening to the so called “experts” of the financial markets, you could have made a killing. Lots of the analysts these days are too old school to understand how the internet makes it’s money. They don’t understand digital assets. It seems like an illusion to them. There’s almost a predisposition to deny the profitability of the internet. The proof is in the stock price. Most of the experts are wrong.
There could be plenty of upside left in Facebook stock. From a financial standpoint, they are making money. If you’re are a user of Facebook you’ll notice that new ads are showing up which would suggest that Zuckerberg isn’t just sitting on his ass. They are finding new and innovative ways to deliver ads which is the core of it’s business model.
Taking the fundamental approach as well as the technical charts we can see that there hasn’t been any heavy unloading in the past few months. Yes I know, the news says pre IPO buyers are starting to unload their holdings. This is both true and false at the same time. News tends to be sensationalistic, and they usually don’t quantify how much selling there is. That is why you must use some kind of metric to determine how heavy the selling is. A quick glance at stock charts will tell you this. You can see the exact numbers by paying attention to the relative volume of the shares being traded. It’s not rocket science.