Facebook is a very popular and very talked about stock right now.
I like FB and can really see potential growth for this company and for this stock. Think about it like this. According to Craig Smith at ExpandedRamblings.com over 1.2 billion people use and are on FB. That’s 15% of the world….just FYI. Almost 700 million people use FB daily.
Advertisers have the ability to know, use, see and determine specific customers, their likes, dislikes, interests, demographics, types of music they listen to, books they read. It’s a plethora of information for advertisers and marketers to use. Companies are paying FB to advertise their videos, sales pages, squeeze pages, landing pages, to specifically targeted people. That is gold for marketers.
As an example: Let’s say you own a company that produces fruit smoothies. Your target demographic is a person who is 18-36 years of age, lives within 10 miles of your store, shops at Whole Foods (WFM) Starbucks (SBUX) and goes to a university and also someone who likes a gym in the local area. Boom, your search result comes back with roughly 1,000 people, within 10 miles of your store, who all fit your criteria. As a business owner, you pay FB $100 to send a 30 second YouTube video to each of these potential clients. FB makes money and you have reached a potential target audience with your message. Now, I only hope you make delicious smoothies. And yes, if you are a company who needs help in advertising and marketing, I do consulting work. FYI – I’m good at it.
Fact is, with millions and millions of consumers with smart phones, all with FB applications already built in, FB has the capability of reaching your target audience instantly. Oh, and speaking of genius, anytime someone has a birthday on FB (as you may have noticed) FB makes it incredibly easy to buy and/or send that person a gift card (to a company FB knows that person already likes). It takes the guessing out of “what to give this person.” It makes it easy, quick and it’s inexpensive. The company gets an injection of cash flow, the person who receives the card is happy, and you have done your good deed as a friend; Incredible.
From a stock perspective FB has been on a tear. As soon as it broke through the super strong resistance of $45.00 I’ve been bullish on FB and will continue to have the technical bullish standpoint as long as it stays above $45.00. FB did quite well on earnings. Here is a quote from Yahoo Finance regarding its earnings; “Revenue from mobile ads, which appear on smart phones, represented 49 percent of Facebook’s total advertising revenue in the third quarter, or roughly $880 million. Mobile ads generated roughly $150 million in the year-ago period, when Facebook was just beginning to develop its mobile ad business.
“It looks like they’re firing on all cylinders,” said JMP Securities analyst Ronald Josey.”
“Facebook’s total revenue in the third quarter was $2.016 billion, ahead of the average analyst expectation of $1.911 billion, according to Thomson Reuters” Billion. That’s a nice number to hear. So, my play at this point, IF FB closes above $52.18 from this positive earnings outlook, it likely will continue to have a nice bullish surge. If FB pulls back to $45.00 due to its earnings announcement that would be another great buying opportunity. One could sell a put to leg into share ownership. Bull put spreads could be done under the strong $45 support area as well.
The simple fact is, from a chart stand point, I am going to wait and see what FB does in the first 15 minutes on its “earnings candle.” If it opens lower than Wednesday’s candle, and breaks the high of the 15 minute high, it likely will be a bullish gap fill. If it breaks the 15 min low, I will wait and reanalyze during the day. Before earnings, I sold a $58 covered call brining in .97 cents per share. That call expires this Friday. After the expiration, I will re-evaluate and likely sell a $56 or $57 covered call expiring the 4th or 5th Friday in November. This could be a great buying opportunity for FB on an earnings move.
