FB nearing $20, do we buy?

[paranoyd androyd]

Not if you are a silicon valley insider my friend. 500k is like 12k stocks...which is peanuts.

agreed, just funny how it's slowly leaked out that borrowing was even happening at IPO. so many people kept saying the 30 day borrowing restriction is always in effect, eventhough it never is.

[paranoyd androyd]

I don't see facebook being around in 10 years.

that statement is too vague. if it lasts 5 years from now, it will still be considered a solid run. and if it lasts 8-10 years from now, it will be a great run.

[milwaukee mike]

how long have you been trading options? and what's your price for those puts?

you're correct in saying there's definite value above cash levels, but i believe that value to be discernible at this point in time. the problem is that fb is also currently hemorrhaging cash due to increased core infrastructure and personnel spend, they're essentially pushing more chips into the middle of the table (which could work out for them).

for disclosure, i'm interested in taking a mid-term bullish position after some nice free money in covering my earlier shorts about a week ago. definitely enjoying the continued downward pressure, but am not interested in some crazy stuff i'm seeing out there right now - specifically some serious naked calls.

i've been trading options for 15 years or so, mostly sell covered calls out of the money and sell out of the money puts.
get burned sometimes but if you do it on stocks you want to buy anyway, you're always better off than just buying the stock. like facebook, if you want to buy it at 20 why not sell the 18 puts for august for .40? worst case scenario then you buy it at 17.60 in 2 weeks, and if it doesn't lose more than another 10% quickly you just made over 2% return in 2 weeks (52% annualized).

and if you get forced in at 18 and the stock is 16, just sell some 18 calls a couple months out and keep reducing your cost basis while you wait.
i have made so much money on kss doing this, that one has been reverting back to 50 for the last 12 years.

[Deep_Rest]

FB won't crack the mobile industry...especially in China where they are banned.

I would run a paired trade long GOOG and short FB.

Who knows...once FB becomes obsolete and trades at $2, Rupert Murdoch might gobble it up ala MySpace.

[SBR_John]

i've been trading options for 15 years or so, mostly sell covered calls out of the money and sell out of the money puts.
get burned sometimes but if you do it on stocks you want to buy anyway, you're always better off than just buying the stock. like facebook, if you want to buy it at 20 why not sell the 18 puts for august for .40? worst case scenario then you buy it at 17.60 in 2 weeks, and if it doesn't lose more than another 10% quickly you just made over 2% return in 2 weeks (52% annualized).

and if you get forced in at 18 and the stock is 16, just sell some 18 calls a couple months out and keep reducing your cost basis while you wait.
i have made so much money on kss doing this, that one has been reverting back to 50 for the last 12 years.

I've traded options a good long time as well. I would rather trade with a stop than buy a put with only 11 trading days on it. On a steady dropping stock like FB I'd rather buy the call and short the stock.

I've had a great time writing covered calls with Goog. I sold the dec 650 for 33.5 this past Monday. They are very steady and resistant to banking and Euro problems.

[ebbearsfb1]

john,

over /under 5 years till sbr is on the market?


seems like it would be sharp to buy sbr stock

[SBR_John]

FB won't crack the mobile industry...especially in China where they are banned.

I would run a paired trade long GOOG and short FB.

Who knows...once FB becomes obsolete and trades at $2, Rupert Murdoch might gobble it up ala MySpace.

Good post... Great thinking, although I'm not that bearish on FB. FB will make money but they are no where near the class of a goog or amzn. Their $38 billion dollar market cap is still rich but getting close. I seem to remember a '13 earnings forecast of .75? At $15 a share they would trade at a multiple of 20 with a market cap of $29 billion. To me, at that price of $15 that would be worth a shot.

[dngf]

Why Kohls, there does not seem to be much premium in the options. I have principally been buying, AMZN, FFIV, AAPL and selling covered calls on these. There is more volatility, and so more option premium, on average each trade is for a return of .75% to 1% per week, sometimes a little more. And sure there has been some weeks when I own the stock to get to a place where I can sell the calls again and wouldn't mind getting called away, but YTD way over 30%. Kohls looks more like selling options on MO or something like that.

[milwaukee mike]

Why Kohls, there does not seem to be much premium in the options. I have principally been buying, AMZN, FFIV, AAPL and selling covered calls on these. There is more volatility, and so more option premium, on average each trade is for a return of .75% to 1% per week, sometimes a little more. And sure there has been some weeks when I own the stock to get to a place where I can sell the calls again and wouldn't mind getting called away, but YTD way over 30%. Kohls looks more like selling options on MO or something like that.

yeah but kohl's is so stable it's essentially free money. with the stock at 51 you can get $1/share for selling the september 47 put. that's 15%/year or so on stuff that's 10% out of the money without risking any capital.

anybody playing kcg? i just sold some august 2.50 puts for .50 - gutsy play

[milwaukee mike]

I've traded options a good long time as well. I would rather trade with a stop than buy a put with only 11 trading days on it. On a steady dropping stock like FB I'd rather buy the call and short the stock.

I've had a great time writing covered calls with Goog. I sold the dec 650 for 33.5 this past Monday. They are very steady and resistant to banking and Euro problems.

yeah that's why i am always SELLING puts. can't remember the last time i actually bought a put, and i sell at least a dozen every month.

[FreeFall]

they've been over-priced for a while. I think we shave off another 10-15% before the lockout expires.

[Marigold HD]

I always said $18 was fair about 2 months ago. I think that I will now buy in the $14-15 range. End of October should be my target guess.

[milwaukee mike]

quick 4% profit here at 20.80 if you would've pulled the trigger john

strange that i am about the only one here with a bullish position (even though it's by selling $18 puts).

i think fb sees 25 before 15

[milwaukee mike]

shows you the power of the sbr board

ask a question, and if everyone says NO then do it!
buy fb at 20 and sell at 21 a day later, that's more profit in a day than holding a 5-year treasury for 5 years

[dngf]

yeah but kohl's is so stable it's essentially free money. with the stock at 51 you can get $1/share for selling the september 47 put. that's 15%/year or so on stuff that's 10% out of the money without risking any capital.

anybody playing kcg? i just sold some august 2.50 puts for .50 - gutsy play

If you sell puts, I suppose you must have margin capacity or cash in your account in case the puts get exercised to you?
Puts seem to have less premium in them than calls, so why do you generally prefer short puts? I suppose it must be that you would not mind owning the stock?

[milwaukee mike]

If you sell puts, I suppose you must have margin capacity or cash in your account in case the puts get exercised to you?
Puts seem to have less premium in them than calls, so why do you generally prefer short puts? I suppose it must be that you would not mind owning the stock?

correct. if a stock like facebook is at 20, and i like it but at $18 instead, then i sell the $18 puts. worst case scenario i buy it $2/share cheaper and get the options money also.
usually i only sell calls on stuff that i buy after selling puts, like cde i ended up getting forced in at $17 so now i sell $17 calls against it.

cde is a terrific stock to play that game with, the options pay huge, they have $20/share in book value, and they are always hedging against silver/gold prices so they're not as dependent on metal prices as people think.

[dngf]

cde releases earnings on Tuesday. I will see how that goes, but it does seem to work.

[milwaukee mike]

cde releases earnings on Tuesday. I will see how that goes, but it does seem to work.

yeah their earnings are always real strange. kensington (gold mine in alaska) is supposed to have more 2nd half production, and they always have a big adjustment due to silver prices on their partial ownership liability.

this quarter the big adjustment should be in their favor (because silver prices were down), "core earnings" are probably closer to zero than the estimates of .23, they are good at disappointing and bad at making money - which is why the stock is down from 75 to 16 even though silver prices are 5 times what they were when the stock was 75 lol.

[hockey216]

im the only human without facebook virus

[Extra Innings]

It's a (10) dollar stock. From a daily user's perspective, I hate the ads and would turn them off if I could. I think Ive clicked on (1) ad in my 5 years as a user. I don't like the idea that they allow multiple user accounts. We have Fido and Morris the cat signing up for accounts. I have a weird feeling that technologically people will start moving backwards...sort of like the cultural revolts in the 60's.

Salud!

[iifold]

http://blogs.marketwatch.com/thetell/2012/08/03/is-20-the-floor-for-facebook%E2%80%99s-stock/?link=sfmw

[TheCentaur]

Don't waste your money! It's a fad that will soon fade out like my space did!

[milwaukee mike]

saying it's a $10 stock is just throwing a number out that makes no rational sense.
let's say they make the estimates of .60/share this year.

so your estimate of $10 would be 8 times earnings after backing out the $5/share in cash they have.
since when has a tech stock that just ipo'd with their huge revenues and growth, traded at 8 times current earnings?

maybe it's a $10 stock at some point in the future if they make less money than they are making this year (doubtful), for now it's a $20-25 stock that came out too high and probably got knocked down a little too much imho.

it's an interesting discussion, well over 90% of the people's comments were positive pre-ipo at $38 and then well over 90% of the comments now say it's a $10 or $15 stock (or worse).

the contrarian in me said it was overpriced at $38 and maybe a little underpriced or fairly priced at $21. everyone that doesn't like it has already sold or shorted it (other than the lockup on august 17th).

[Extra Innings]

saying it's a $10 stock is just throwing a number out that makes no rational sense.
let's say they make the estimates of .60/share this year.

so your estimate of $10 would be 8 times earnings after backing out the $5/share in cash they have.
since when has a tech stock that just ipo'd with their huge revenues and growth, traded at 8 times current earnings?

maybe it's a $10 stock at some point in the future if they make less money than they are making this year (doubtful), for now it's a $20-25 stock that came out too high and probably got knocked down a little too much imho.

it's an interesting discussion, well over 90% of the people's comments were positive pre-ipo at $38 and then well over 90% of the comments now say it's a $10 or $15 stock (or worse).

the contrarian in me said it was overpriced at $38 and maybe a little underpriced or fairly priced at $21. everyone that doesn't like it has already sold or shorted it (other than the lockup on august 17th).

No doubt a baseless comment on my part. I love facebook yet I may be on there for 5-10 minutes a day. I see more action by people with any type of buying power or status on applications like twitter. I'm thinking that the social networking thing or how it will work is still in it's infancy....just not sure how facebook will do or if the earnings will be consistent.

[milwaukee mike]

Fair enough ei

I think the difference between facebook and past tech fads like myspace, theglobe, etc is that parents are on facebook. People with buying power hardly knew what myspace was, but almost everyone is aware of facebook. Whether or not thats worth $40 billion remains to be seen...

[paranoyd androyd]

I always said $18 was fair about 2 months ago. I think that I will now buy in the $14-15 range. End of October should be my target guess.

won't be completely oversold until end of november

[Bill Dozer]

There was a big ad scandal which was documented in a Forbes article last week. http://www.forbes.com/sites/patrickh...b-becoming-bs/

Basically the behavior of people who view your ads on facebook looks illegitimate. Ad mgt is how facebook makes money and will likely hurt the stock. It could bring on class action lawsuits if major companies find the same and can document it.

[milwaukee mike]

Bill, everyone already knows that.
reminds me of when burger king test marketed frozen cokes, coke had employees buy tons of them in test markets so sales would be good enough to roll out nationally.

Burger king found out, complained, but kept selling frozen coke anyway

[Balco10]

FB is a disaster! I see it at below $10 by next Spring.

[Monte]

FB is the Pied Piper of our age, and will be gone again hopefully.
Hard to believe so many lemmings actually supported this pos.

[floridagolfer]

I won't buy this at $20 . . . or $18 . . . or $16. It'll have to be single digits before I even give it a second thought.

[GunShard]

Only when Facebook becomes an advertisement overload site like Youtube.

That uses real advertisments like Pepsi, McDonalds and Movie trailers on the front page and side pages of Facebook. Then I would buy the stock.

Facebook has no major advertisement, thus no major revenue.

[GunShard]

Don't waste your money! It's a fad that will soon fade out like my space did! Google is where you want your money! Top notch search engine, chrome browser, great on line software like google docs, they own you tube, and they're just gett'in started dominating the future of the internet and how it's used. Zuckerburg is an lying scumbag who stole someone else's idea and paid off the real creators of FB. His own sister won't ever work for him, she works for Google!

I hope Twitter is a fad that dies out as well.
A website that doesn't allow you to type a paragraph is retarded.

[PAULYPOKER]

Facebook: Like it but be cautious to invest


Published:01 August, 2012,

Facebook has again made investors pull long faces as they saw another record low for the company’s stock on Tuesday. Shares are losing 1.6% in the early session on Wednesday, after tumbling a whopping 6% to $21.71 a share the day before.
The shares are now 43% below the $38 a share IPO debut on May 18. The company has lost over 40 billion dollars in value since coming public.

While the reported earnings for the company last week roughly matched forecasts, concerns about growth and share valuation are far from over. Investors had hoped to see more progress in terms of user growth and in how the company is capitalizing on the rapid rise in mobile usage.
Analysts predict the major investors are likely to rid themselves of at least some of their holdings. So might executives and other shareholders.
Billions of Facebook shares are poised to be released from lockup which expires in August and will increase Facebook's float by 276% by November. On August 16th insiders, such as employees and directors can sell 268 million shares. “Given the stock’s plunge so far, investors are braced for an avalanche of available shares from insider sales, putting more downward pressure on the stock price,” USA Today concludes.
Although Facebook’s CEO Mark Zuckerberg was swifter than some of his company’s investors to sell 30.2 million of his shares for $1.1 billion after the botched IPO, it has still erased billions of dollars from Zuckerberg's personal fortune.

Analysts attributed the current sell-off to the announcement of Facebook-related losses by a large Swiss bank. On Tuesday, UBS blamed a $360 million loss from Facebook's debut on exchange operator Nasdaq, becoming the latest financial institution to report a hit from the first day of trading. The bank claims it lost money due to technical problems handling Facebook stock orders for clients.

[NYSportsGuy210]

Anybody know why Sears Holding Corporation (SHLD) is priced at $49.32?

I don't know anyone that shops at Sears anymore or has for the last 5 years.