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While I am long term bullish on the ultimate social media company, Facebook (FB), now is not the time to enter the stock. The people who do buy between now and October 25th could be in for a world of hurt. The stock hit a low of $17.55, and has since rebounded 19.75% to $21.87 in just a few short weeks. One of the cardinal sins with investing is chasing. Like a dog chasing squirrels across a street, those who chase usually get whacked.

Why October 25th? October 25th is Facebook's next earnings release. The last earnings release was a massive disappointment for the Street. While Facebook met EPS guidance, revenue fell short on the mobile platform. The future of social media depends greatly on the ability of companies such as Facebook to capitalize on, and monetize, the mobile platform. Facebook has been throwing millions of dollars into remodeling that mobile platform, but it will take time for them to maximize the potential profit in the space.

On October 25th, Facebook should be able to meet the $.11 EPS target, but Wall Street will be expecting nearly an Apple-like (AAPL) growth rate. Unfortunately, Facebook may be a new stock, but they are a mature company. The growth rate analysts are so desperately seeking with Facebook simply aren't attainable. Currently, Facebook trades at a 34.71 forward P/E ratio. That in itself is an expensive evaluation. Then factor in a 1.62 PEG ratio and a 10.65 P/S ratio, and there is still plenty of room for the stock to fall back.

If Facebook produces lackluster earnings in October, this stock could get hit again. Facebook may even retest that $17.55 level. A forward P/E as high as 27 would be much more reasonable. Again, while Facebook may be a mature company, the potential to monetize the mobile platform gives them a little more leeway. Keep an eye on $17 as a key turning point in the stock.

Facebook (FB) still has revenue growing north of 20%. Analysts expect the mobile advertising industry to be worth more than $12 billion by 2016. If Facebook captures just 30% of that market, they are looking at increasing the bottom line by $3.6 billion. That is not a number to be taken lightly. Then introduce any other products Facebook can develop, or purchase, and you have a very bullish scenario for this stock. The stock has a headwind coming in the near-term that should be considered by any investor.

Source: Why Avoid Facebook Until After October 25?

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