Facebook has been experiencing some unusual selling pressure the last few weeks. To a fly on the wall, it would almost seem as if there is a forceful group of sellers who are intent on driving down the stock price regardless of how much buying interest there is.
Today for example at market open, the sellers drove the stock straight down to $25.78 with tremendous selling pressure. Buyers reacted forcefully and finally overpowered the sellers bringing the stock up $1.00 to $26.78.
Over the last few weeks, we have seen the stock hit highs over $28.30 a number of times. However, they price has been unsustainable as sellers forcefully knock the stock down and refuse to let it rise. If you watch the level two quotes you will notice the selling pattern and the aggressiveness increase as the price recovers due to heavy buying.
In the last few weeks since the forceful selling started, hundred of millions of shares have traded hands. 15 trading days multiplied by an average of 30 Million shares totaling over 450 Million shares, nearly a third of the outstanding shares of Facebook.
The facts remain as follows.
Facebook when compared to Linked-In is a bargain at this price and deserves to be in the $32.00 range and moving higher.
Facebook is trading at less than 13x its 2012 revenue of $5.1 Billion whereas Linked-In is trading at more than 19x its $972.3 Million revenue for 2012.
Facebook is becoming the new go to for news which I wil cover in the next article why newspapers and television news will play second fiddle to Facebook, earning Facebook huge amounts of ad revenue while people glean the news from Facebook pages.
Disclosure: I am long FB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.