With shares of Facebook (NASDAQ:FB) trading at around $30.17, is FB an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
Facebook is one of the most heavily traded stocks throughout the broader market. This indicates heightened interest in the story. As we all know, the public jumped in big time on Facebook, and unless the timing was impeccable, most of those investors are saddled with a loss at the moment. Due to Facebook being a household name and being surrounded by an extraordinary amount of hype, retail investors expected Apple-like (NASDAQ:AAPL) returns. Facebook will never be Apple! That is a guarantee. Through incredible innovation, Apple created and sold products (and still does) that changed the world. Facebook might be popular, but it’s still just a company that is attempting to monetize a website. This doesn’t mean Facebook will fail. Rather, it will be around for a long time. The disconnect is with expectations.
One potential driver for Facebook is Mark Zuckerberg. He’s highly intelligent, but more importantly, he knows what to say and how to say it. Sometimes a charismatic leader can spread optimism with great effectiveness and everyone ends up buying into the story, which can actually change the situation for the better despite challenging conditions. At the same time, a pessimist would look at this as manipulation…