Active-Trader - Trading around FB

Welcome back Active Traders.

As you know one of my favorite stocks in this environment has been Facebook. I am a regular user of the site and a big fan of the stock.

One of the great things about Facebook as both a company and a stock is they are constantly being under estimated.. Recall that after a widely publicized and somewhat disastrous Initial Public Offering back in July of 2012, the stock traded sideways to down and reached a low of about $18. I remember that well because I sold down there once the stock broke $20 and it looked to be on its way to the single digits.

But then something transformative happened on July 24, 2013.  The company reported better than expected earnings that proved the company could provide strong growth on all levels, from monthly users to revenue to profits.  The stock reacted immediately gapping from the $26 level up to about 32 on that news alone.  Since then the company has delivered strong user, revenue and profit growth in every quarter since then.  They even proved they can monetize the important and growing mobile device user segment.

And then news came out that teens who had previously reported that they were no longer using Facebook
because it wasn't cool,  were actually still using the service, just not willing to admit it.  Most teens instead like Instagram, the photo sharing site also owned by Facebook.  Instagram does not yet produce ad revenue, but I expect FB will start to monetize that platform when the timing is right.

As to how I have been trading FB, I was long from a position in early May which I unloaded up the high 67 area.  They I reloaded on a bounce of the voodoo support area at 62.31 and exited for a quick profit just short of the 65 area.   The next day, we got a gap down to the 63.5 area where I once again went long and took profits when it filled the gap later than day at the $65 area.  Since then the stock has moved higher without me and I will be looking to be long the stock into earnings which are expected on Wednesday July 23 after the close.

Have a great trading week ahead.