Facebook's (FB) numbers are absolutely ridiculous. Our model has huge EPS upside versus the Street which implies a much higher stock price. But the news and the chart break needs to be respected. We have an easier way to manage this onslaught of news: patience, lean into earnings and watch action.
We'll explain.
First The Chart: Did It Break?
It's easy to say I'm getting Facebook at a steal but how low can it go? The market can do anything so really we can't know how low is low.
The first check is to look at the chart.
We drew two lines. This is just about all the trading since Facebook went public. You can see it's been in a pretty little uptrend since 2013.
But...
The line we think matters more is the upper one. Recent trading closed below that uptrend. That's a break.
When something breaks it's always good to be conservative. If it closes back sharply above that line you have confirmation that we could be through the woods.
For now given the news and the break, It's safer to be safe.
This Has Turned Ugly In An Election Year
Do I want to step into Facebook right now? I love the story, I love the earnings. But the news flow is clearly against them and now this has turned political in an election year. Not good.
News sites have started to compare this data breach involving Cambridge Analytica which benefited the Trump Campaign to Obama's app which also collected "friends" data unbeknownst to someone's "friends."
This is something that could get ugly.
Mid-term elections are coming in the US later this year (November 6th) and it's going to be battle-royale. Facebook's data breach is likely going to be a main topic against Trump and Republicans and Facebook's going
We published the above to give a taste of what Nail Tech Earnings members receive daily on multiple companies that we speak to.
In the last few months we've spoken to about 70 tech company management teams and built quarterly earnings models with them. We've been doing this for 20 years for big hedge funds. Dip your toe in the water with us.
Wishing you a ton of success!
