The Actual Recommended Trade.....
** OPTION TRADE: Buy FB APR
09 2021 287.500 CALLS at approximately $4.90.
The Profit Explained…..
Actual entry price was $5.68 at the open
of the market.
Price at 1:51pm was $10.20 .
(This was based around a note sent to
members at the time of the recommendation -- NOTE:
Again, keep a close eye on the stock today – if there is sufficient profit it
would be advisable to exit sooner than later!)
TOTAL PROFIT FOR THE DAYS TRADING IS 80%.
Why The Trade Recommendation On Facebook?
Facebook stock, after six mostly moribund
months, has reawakened. The spark came last Friday, when Facebook CEO Mark
Zuckerberg gave a rousing update on the social media giant's big e-commerce
push. He also suggested that a new privacy measure from Apple, which is among
investors' biggest worries, could actually be a blessing in disguise for
FB stock and other big tech growth stocks whose earnings surged amid the
pandemic have taken a back seat as vaccines and massive fiscal stimulus begin
to rev up the rest of the economy. But Facebook's slump was particularly
Facebook blew away Q4 earnings estimates on Jan. 27, posting its fastest
revenue growth in more than two years. But FB stock suffered a nasty reversal
the next day, despite a flurry of price-target hikes to as high as 360.
The Major Catalysts for
earnings easily surpassed fourth-quarter estimates. The FANG stock earned $3.88
per share, up 52% from a year ago and 69 cents ahead of the consensus. Revenue
surged 33% to $28.1 billion.
accelerating revenue growth came despite a further dip in daily active users in
the U.S. and Canada to 195 million, down from 198 million in Q2. Facebook had
previously warned that a spike in use of the social media app that occurred
early in the pandemic would moderate as life normalized.
picture is that Facebook advertisers, a group that has grown to more than 10
million businesses, are using the social media site to connect with prospective
customers like never before.
active users rose to 1.845 million on the Facebook platform vs. 1.82 million
the prior quarter, led by growth in the Asia-Pacific region. Across all
platforms, daily active users hit 2.6 billion.
came as ad impressions served across Facebook properties grew at a slower 25%
pace vs. a year ago. However, the average price per ad rose 5%, after falling
9% in Q3.
The rates Facebook
draws for its advertising took a hit in 2020, buffeted by headwinds ranging
from an industry slump alongside the COVID-19 pandemic to the "Stop Hate
For Profit" campaign, which led hundreds of advertisers to boycott the
platform last summer.
But those rates (measured in cost per thousand impressions, or CPM) have
returned to pre-pandemic levels and are showing continued growth - back to
business, as it were.
The cost of Facebook advertising is up 30% compared to mid-March 2020, data
from Aisle Rocket show.
back at around $8/CPM, and back on the growth track: “Projections are showing that CPMs will continue to increase – and we
are not even in the holiday season yet, where we typically see the highest CPMs
on Facebook,” says Aisle Rocket's Jen Strojin, suggesting the rate could
hit $11/CPM by late summer.
CPMs are a
proxy for competition, analysts note, and so Facebook is now the beneficiary of
more competitive advertisers who pulled back campaigns early in the pandemic,
but are now making moves such as pivoting to e-commerce.
“Everybody wants back in the pool,
because they want to get in on the pent-up demand and the recovery,” says Kenshoo's Chris Costello.
Veteran wall street tech
analyst Brent Thill has cautioned against buying stocks in the underperforming
tech sector, with the exception of social media giant Facebook.
The Jefferies analyst
said that tech is “off limits right now” as investors put more money into
travel and airline stocks amid hopes of a strong economic recovery from the
According to the analyst,
valuation combined with the tech names could currently be frustrating a lot of
Thill said that compared
to other companies in the tech sector, Facebook is a “cheap name.”
“$15 of earnings power and a mid-20 [P/E] multiple
on it, and you are at $350 to $375 on the stock. So you got a lot of upside
still on Facebook. We like that,” the analyst added.
On Dec. 9,
the Federal Trade Commission and a group of state attorneys general filed
separate antitrust cases alleging that Facebook's acquisitions of Instagram and
WhatsApp were anticompetitive in nature and intended to bolster its monopoly
analysts are largely dismissing the possibility of a breakup.
"We continue to believe the
likelihood of a breakup of FB is low (judges are typically loathe to undo
transactions) and the sum of parts of the various segments is likely similar or
greater than FB current valuation," Raymond James analyst Aaron Kessler wrote in a
On the PressClub podcast
on March 19, Zuckerberg announced that Facebook Shops, first announced last
May, has more than 1 million active shops in its digital mall and 250 million shoppers,
or at least browsers, per month.
Shops is Facebook's big
effort to bring e-commerce purchases in-house, instead of just facilitating
user-advertiser connections that result in off-site purchases. Businesses can
set up a single shop for customers to access on both Facebook and Instagram.
Morgan Stanley analyst
Brian Nowak said in a research note that the scale Shops has achieved in just
10 months"should give investors more confidence in the durability of
FB's multiyear growth."
Nowak said Morgan Stanley's
AlphaWise survey had previously suggested that about 30% of Americans are
shopping on Facebook's Instagram site per month. Morgan Stanley has estimated
$1.9 billion in annual revenue tied to Instagram Shops. Zuckerberg's disclosure
"implies that the global contribution from Shops this/next year is
likely to be larger than our ~$1.9bn annual estimate,"Nowak wrote.
It's dangerous to bet against FB stock, even
as it faces a long antitrust battle and regulatory threats. Growth stocks could
continue to face headwinds from rising interest rates. Yet Facebook has showed
impressive agility with its well-timed e-commerce push.