Now is it time to buy Facebook (FB) (March 22, 2018)
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I want to look at Facebook ( NASDAQ: FB ) and here’s why: You guys know the story, it is just a horrible thing and this and that and the other thing. I don’t like what’s going on with Facebook ( NASDAQ: FB ), the company, either. But with respect to the stock here is what I am looking at: I sent out an email to members earlier today suggesting that they consider buying Facebook ( NASDAQ: FB ) before the close. That was in anticipation of the “puff” job that Julia Boorstin did with Sheryl Sandberg in her interview at the closing bell; Sandberg probably wrote the questions. The whole interview was definitely rehearsed and that’s fine. That is one of the reasons why I am saying, “Hey, maybe the stock is a buy.”
First of all, with respect to Facebook ( NASDAQ: FB ) itself; look, this is one of those companies, it is kind of like Google ( NASDAQ: GOOG ), too big to fail. I mean truly, too big to fail. Ultimately, I think Facebook ( NASDAQ: FB ) stock will wind up hitting new highs. I am pretty sure that it won’t be this week and it won’t be next week or the week after that. But the bottom line is, all of this will pass by the time (my bet), by the time the price will have a chance to fill in this part of the chart this story will be totally forgotten.
How many of you remember the whole EpiPen thing with Mylan Pharmaceuticals ( NASDAQ: MYL )? That was kind of a bummer. Here is where it was, here is where it is now. How about Equifax ( NYSE: EFX )? It still hasn’t hit it’s all-time high but this puppy went all the way down; it seemed like it was going to zero. It got a third of its market cap chopped off and then off of the bottom the stock ran up 40 percent. Those were both public relations disasters. By the way, with Equifax ( NYSE: EFX ), they didn’t even have a contract with you. Believe it or not, they didn’t owe you a duty of anything; that is just an “aside”.
Now Facebook ( NASDAQ: FB ) is a different deal. I am not talking about the merits of what they did or didn’t do. I am talking about the stock and I am talking about the actual company and where this is going to lead this stock over time. Here’s the deal: Whatever they did that is going to cost money; hiring more employees is a different thing but any fines, any class action lawsuit, which, the first thing that comes to mind is, what is the damage to the class? Were you hurt by this thing? No, you weren’t.
I just don’t think their class action exposure is actually going to be that big. But even if it is, here is what I know about the markets: That is a one-time expense. So one quarter they totally miss earnings, “Oh my gosh! It was horrible, they lost money!” But it was a one-time expense because they got rid of that March 2018 class action suit.
Basically what I am saying is, “This too shall pass”. After Zuckerberg’s interview on Wednesday night and then Sandberg’s interview Thursday, today after the close, it just seems to me like the stock has gone down enough. I am not saying that this would be a buy, just like this is an amazing opportunity and you have got to buy this stock and you will be so happy a year from now. No, don’t look at it that way. Look at it as a potential trade.
I think that this Tuesday low, 161.95, we’ll call it 162.00, I just feel like that is a low that is going to hold. I don’t see the stock falling lower than that. I think there is so much bad news priced in that the stock is likely to move up a bit. I could be wrong and that is why I am selling spreads; I am selling puts, 160.00, 150.00, 140.00. Sell these out of the money puts because you know if Facebook ( NASDAQ: FB ) does continue to decline money managers who GET the fact that all of this stuff, really when it gets down to it, is a headline. It is a negative headline that 3 months from now, 6 months from now is going to be “water under the bridge” and they’re in for the long haul.
That is the buying that is going to keep the stock from falling too much further. Would I buy it outright? Absolutely not! This is a busted chart; it stinks. It is a horrible chart. It could trade in this range, between 160.00 and 180.00; it could trade in this range for months. Literally, until the fall, we just don’t know. But do I think the stock can fall further than this? Not too much, I really don’t. That’s my deal; selling some puts. Sell some April puts; there is still plenty of volatility in those things, maybe even May’s but that is probably for a different video.
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