UPDATE: It’s been four months since this post was published and Facebook’s stock has dropped from the $40s to $19 with no clear bottom in sight…I get emails daily from people who only read about my cynicism too late and have massive losses, which breaks my heart. Please watch these 7 free video lessons to learn about more predictable stocks like this and avoid painful losses like this…grrrrr, what a waste!
As mystudents have learned, my specialty is trading and teaching others to trade penny stock pump and dumps.
I’ve been quite successful at both, earning just under $3 million in personal trading profits (see my loooong track record HERE) and now subscribers of my 4 have earned in excess of $4 million in roughly 15,000 trades…see how they did it trade-by-trade-by-trade (NO other guru gives such details/has so many success stories like THESE and that’s why some of my students have even named their babies after me! No joke, read more about it HERE)
In fact, in the video I made HERE to get applications for those who truly want to learn by becoming my student just a few months ago, I mention my top student has earned $100,000…now as I wrote about a few days ago, his trading profits are over $400,000 and even since that blog post, he’s increased his monthly earnings to $80,000+.
And he’d be over $500,000 in trading profits right now had he not tried someone else’s strategy and lost nearly $50,000 on one trade…but given my own six-figure losses when I’ve veered from the proven trading strategy I teach in these 7 free video lessons, I understand that sometimes you can’t realize how good something is without trying something else that doesn’t work as well…the whole the sweet isn’t as sweet without the sour kind of thinking…
And it’s not just about the $, read some reviews HERE from my students, they enjoy actually learning and becoming self-sufficient which is great since I preach that in every single one of my DVD guides (email email@example.com for specials) and at my upcoming Vegas conference…watch the video teaser) (again email us for earlybird specials)
…not to mention trading penny stocks is especially great because you can do it from ANYWHERE IN THE WORLD as you can see from my pimp St. Regis Bali Private Lagoon Villa I’ve spent the past few weeks chilling in/trading from:
But because I am one of the most profitable bloggers in the world (I’ll soon begin to teach that subject too via my upcoming website Upsellonomics HERE), I LOVE writing about internet startups.
Here’s a collection of blog posts where I correctly called Digg a steaming pile of shit (before its collapse over the past few years), correctly nailed Groupon and Zynga as bloated pigs (Zynga Inc (ZNGA) stock has since dropped 25% and Groupon Inc (GRPN) has since dropped 50%) and have invested in one of the fastest growing websites in the world, one that actually quite the business model that crushes advertising and virtual good buying.
And I’ve never received so many emails, phone calls, text messages and Facebook messages from students, friends, enemies and random people asking if they should buy Facebook’s stock at the IPO.
So here’s a few bullet points that illustrate my take on FB currently trading at $38.23 just after one day of trading as a public company…let’s see if by the end you can understand if it’s a buy, sell or sell short:
1. Facebook is the hottest company in the world in terms of brand recognition, user popularity, user growth, internet domination, technological and social revolution…with roughly 10% of the world, and a much bigger % of the civilized world, using the platform each month…this all adds up to FB the stock deserving a truly premium valuation.
2. $100 billion valuation for an internet company with slowing growth, just $4 billion in sales and $1 billion in annual profits sounds absurd, especially given internet darling Amazon.com, Inc. (AMZN) is also worth roughly $100 billion with just slightly slower growth and 15x the sales of FB. Mind you FB was valued at just $10 billion 3 years ago when they had roughly 1/4 the users and $50 billion in January 2011 as detailed so eloquently in this Facebook pricing timeline on SecondMarket.
3. FB’s stock wanted to drop under the IPO price of $38 many times during its 1st day of trading…only the underwriters held it up so they wouldn’t be publicly humiliated…they won’t always be there to prop this thing up, much like promoters eventually give up on pump and dumps when they’ve sold all their shares and the stocks ALL drop in the same exact manner like these examples.
4. The way to make $ on FB’s IPO has nothing to do with trading FB’s stock, it was all about buying similar plays like the incompetent adult social network FriendFinder Networks Inc (FFN) in the days leading up to FB’s IPO…check out how several traders bought in the low $1s and sold in the high $1s, examples are HERE and HERE for a 40% gain in just a few days.
5. As I suggested in my chatroom for subscribers of my 4, shorting Linkedin Corporation (LNKD) due to the FB hype was a good risk/reward play, especially since it had spiked from $104 to $109 in the minutes leading up to FB’s IPO…this idea is already a 10% winner since LNKD finished the day down $10/share off its $109/share highs…only one of my students took me up on this idea, and he was late, but he still made several hundred dollars.
6. FB currently earns a little over $1 per user per quarter…the bulls need more users and more revenue per user except revenue per user has been stagnant, to actually dropping a bit recently, and despite FB’s massive user growth, that % change is dropping too as there’s simply not many more people in the world that can signup…the bears makes a strong case that this is the fundamental problem with FB and why it is SO overvalued.
7. There’s always the risk that Facebook won’t be a popular platform ever…the Myspace syndrome where they got bought for $500 million, was thought to be a great deal and worth billions, then got very unpopular very quickly and now friggin Justin Timberlake and friends bought it for just $35 million. Don’t even get me started on Friendster and a host of other social networks like Bebo that were greatly hyped and now are basically worthless.
8. FB has been adding features galore, the bulls say one or more of these features will really blowup Facebook’s revenues/profits…of course Google Inc (GOOG) has the same problem and none of their new projects have taken off…97% of their revenues still come from their one and only hit Adwords/Adsense that funds everything else…and unfortunately for FB, Google’s one-hit-wonder greatly dwarfs FB’s by nearly 10x (yet their valuation is only 2x hmmmm)
9. FB’s user data is only going to get more valuable since they track EVERYTHING about us…and when I say “us”, oh yes I’m a frequent Facebook user, join my group page since the bastards have limited me to 5,000 friends and I’ve been maxed out for a while now) but right now the ads really aren’t that effective as several companies have discovered.
10. Apple Inc. (AAPL) is the world’s most valuable company at roughly $500 billion so while FB is hyped, people at least realize it’s not the most valuable company in the world…by a longshot.
So we have A TON of contradictory indicators here…the most important being the price action where FB wanted to crack below $38 on Friday which means it’ll likely drop big in the coming week/weeks when the promoters…uh I mean underwriters…stop propping it up like its a carcass in Weekend At Bernie’s.
That said, FB’s valuation isn’t too ridiculous given how widely popular they are and the probability that they will figure out ways to increase their profitability with boring but necessary things like payments and e-commerce.
And even though I wisely warned by subscribers of my 4ahead of time with this premarket take on FB:
Facebook, Inc. (FB) is the biggest guessing game in the world right now…I have about 200 emails from traders and non-traders alike asking me if they should buy…I’ll have a full writeup of my take on Sunday, but doubt I’ll trade it today since it’ll likely pop to $50-60 at the open or be a dud like ZNGA…no way to tell, don’t waste time reading everyone’s opinion, wait for price action and a trend to form, either an uptrend or downtrend…its already far too pricey, but it’s the most popular product in the world so you have a contradiction…no play when there’s such a contradiction like that, focus on scams and pump and dumps, much easier, far fewer variables
…I personally believed their IPO would have more pop as the world’s idiots would all put in market orders and bid the thing up into the $50s, but I underestimated the ferociousness of the selling…insiders and earlybirds aren’t taking any chances.
So, all in all, I’d guesstimate a fair valuation for FB of $60-70 billion, but all the metrics are moving so fast, who knows and who cares. I’m not gonna trade the stock anytime soon as the odds just aren’t good enough to be worth my precious time. You gotta be greedy with your time in this life as it’s fleeting.
I’ve learned to instead focus on gimmes like this trade setup where subscribers of my 4 and I banked nearly $100,000 in less than a week…and that’s why I’m a multi-millionaire vs. all the people asking me for advice on this guessing game who are stock market ignorant, poor and confused — continually watching useless shit like CNBC and reading the WSJ to feel “intelligent” while really just betting their money on stocks with casino-like odds.
If only they would become my at least watch my 7 free video lessons and realize how to make PREDICTABLE $ in the markets!students or
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