Exactly one week ago, I wrote a bullish post about FB as the stock fell off a cliff:
This latest leg lower kicked off after [FB] announced it was suspending Trump’s accounts for violating their terms of service. No doubt investors are expecting backlash from Trump supporters and there will be an incremental hit to their revenues.
But as far as boycotts go, this one will be mild. Very few corporate advertisers are interested joining this boycott because they don’t want to get dragged into the dumpster fire taking place in Washington D.C. That means FB’s advertising rates won’t take a meaningful hit.
As far as users go, FB’s target audience is suburban soccer moms that share cupcake recipes. They are highly unlikely to abandon FB and head over to these unmoderated free speech alternatives.
Seven days later and the stock is up nearly 10%. Not bad for a few days of work.
Now don’t get me wrong, publishing that post on the exact day this stock bottomed was pure luck. But recognizing the buying opportunity was most definitely not luck.
Trading successfully comes from recognizing opportunities when the odds are stacked in our favor. One of the most profitable trades is when the herd starts rushing out of a perfectly good company for an immaterial reason. And even when the reasons are legitimate, most of the time the stock market takes the selling too far and even defective stocks are primed for a snapback.
Headlines affecting FB over the last several weeks and months will do little to damage one of this country’s most profitable companies. I would view any further weakness in FB as a buying opportunity. Unfortunately, I don’t think we will get that lucky because this stock is giving off vibes it is ready to head back to the highs.
A big shoutout to everyone liking and sharing these posts!!!
That positive feedback motivates me to keep writing these free posts!
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Jani Ziedins (pronounced Ya-nee) is a full-time investor and financial analyst that has successfully traded stocks and options for nearly three decades. He has an undergraduate engineering degree from the Colorado School of Mines and two graduate business degrees from the University of Colorado Denver. His prior professional experience includes engineering at Fortune 500 companies, small business consulting, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two children.