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Facebook (FB) - Gap and Go

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  • 1. Gap-and-Go+Making a ComebackKMayTicker: FBDate: Thursday, May 2, 2013
  • 2. Big Picture
  • 3. ADV: 39.34 millionATR: .88FS%: 2.15β: -Facebook, Inc. operates as a social networking company worldwide. Itbuilds various tools that enable users to connect, share, discover, andcommunicate with each other on mobile devices and computers. Thecompanys Facebook Platform is a set of development tools andapplication programming interfaces that enables developers tointegrate with Facebook for creating social apps and Websites. As ofDecember 31, 2012, it had 1.06 billion monthly active users and 618million daily active users.
  • 4. Intraday FundamentalsWednesday, May 1, 4:27 PM More on Facebook: Monthly active users(MAUs) +5% Q/Q and +23% Y/Y in Q1 to 1.11B. Daily users +8% Q/Q and+26% Y/Y (grew faster than MAUs, higher engagement) to 665M. MobileMAUs +10% Q/Q and +54% Y/Y to 751M. Ad sales of $1.25B, -6% Q/Q(seasonality) and +43% Y/Y and 85% of revenue (84% in Q4). Mobile 30%of ad sales, up from 23% in Q4 - sales +23% Q/Q to $375M. Paymentsrevenue (games) -17% Q/Q to $213M. Costs/expenses +56% Y/Y (+67% inQ4), well above rev. growth - R&D spend +91%, sales/marketing +42%,G&A +69%. Capex -28% Y/Y to $327M. Cash balance -$100M Q/Q to$9.5B. FB +0.8% AH.Wednesday, May 1, 4:08 PM Facebook (FB): Q1 EPS of $0.12 misses by$0.01. Revenue of $1.46B (+38% Y/Y) beats by $20M. Shares +2.8% AH.CC at 5PM ET (webcast).- Seeking Alpha
  • 5. Long-Term TechnicalsLong term chart, annotated.
  • 6. Trade ManagementToday stock snapshot, annotated withexecution and possible execution details.
  • 7. Trade ManagementToday stock snapshot, annotated withexecution and possible execution details.
  • 8. FB - NotesI think this was a pretty interesting trade for me... often when I am verybeat down in a stock, the last thing I want to do is give it another try. Ihad a rough morning with FB, and gave it a lot of money. After goingfor a walk and trading some other stocks, I came back to it with afresh point of view and realized that, despite being difficult earlier inthe day, it had become a really good set up. When I finally got long at46c and 55c I really didnt care if I ended up almost stopped out forthe day with one stock, because this new set-up warranted the risk...seeing this as a different trade (and it was, the consolidation over 40cwas cleaner than those before) helped me get in the right frame ofmind to take another risk with FB.Because I was trying to make back losses, I traded more than Iusually would have around my core to generate cash flow.
  • 9. FB – Make it BetterI could have avoided a lot of the headache with FB in the morning byhaving a really good entry price. I saw the opportunity in thepremarket and passed on it (mistake, there was enough in my favor totake the trade there).There was a really good add where FB supported over 60c. You couldadd at support there, 64-65c, and take on less risk (to 59c).. the littlecushion an add there creates would make it easier to add for the 70cbreakout. Thats an easier way to have size that you can hold for morethan a 10c scalp.
  • 10. Trade Idea29 was a really significant resistance level this afternoon. If FB canhold over this level tomorrow, there is certainly a long trade to bemade.