Thursday, 13 July 2017

Facebook: long or short?

Posted by Anonymous at 12:19 Labels:

We all know it. The technology sector has been doing great this first half of the year. And despite a recent downward correction, it is still the best performing sector of 2017.

The S&P 500 Technology Select Sector Index (IXT) has managed to gain 13.4 percent year-to-date by the time of this writing, compared to a 7.4 percent increase of the index itself.

FAANG stand for Facebook, Amazon, Apple, Netflix and Google. These companies count on large market-cap and they are certainly among the most popular between investors worldwide.

In this particular occasion I would like to focus on the giant social network empire Facebook. But why? First, because we’re entering into the second-quarter earnings season in the United States and reports from major tech companies will be on the watchlist for sure.

Second, Mark Zuckerberg’s company announced that it would expand ads test to a wider number of Messenger user in the near future. And why is it relevant? Well… let’s just say because the company relies almost entirely on its ability to turn users into money via ads.

The company is progressively trying to monetize two of its most successful apps: Messenger and Whatsapp. Messenger is used by 1.2 billion people per month, which could be interpreted as a direct inbox for investors saying “Hi, there’s lot of potential here. Better earnings soon”.

Facebook stocks are not overbought. And that’s something relevant to keep into account for a stock that’s up 30 percent since November 2016. Wall Street investors trust Mark and his team because they’ve proven that big changes can be made quickly.

Not only Facebook plans look promising, but the psychological aspect supports it as well. The tech giant is due to release Q2 earnings and revenues on July 26.

Our forecast: Long

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