One Year After Its IPO, Is Facebook Finally a Buy?

It has been nearly a year since Facebook had its Initial Public Offering (IPO). There was a ton of hype going into May 18 (the day of the IPO), but there was also some skepticism. As we know, the IPO was a ‘dud’ and Facebook sold off heavily for the next 4 weeks. It eventually sold off until it found a bottom in early September (at 17.55). $FB then went on to build a base and bounce higher after its lockup expiry. Earlier this year it looked like Facebook was going to rally back to its IPO levels, but after reporting earnings for Q4 in January, it started to sell off once more. Now, for the past few months, its been languishing in a 4 point range between (roughly) 25 an 29.

So is there any hope for Facebook (and all those people holding stock from higher levels)? While I am sure there are over hundreds of fundamental arguments, there can only be on chart. So let’s dive into some Technical Analysis.

The Chart

$FB Weekly Chart

I have marked several levels below. For the past few months, Facebook has traded in the range between ~25 (bright green line) and ~29 (white line). I like a break below or above these levels will determine where $FB goes in the following months. There is a significant pivot level of about ~24 right below, but  it is not support unless it hold (previous resistance COULD be support, not WILL be).

If $FB breaks back above ~28.75-29, I can see it rallying to 32, where it was met with heavy resistance. A break above that (and 33.50) and I think the “return to IPO prices” party could start. We could see prices rally all the way to the mid 36s or even 40.

So for now, Facebook looks neutral as it sits pretty much in the middle of its 1-yearl range right above the 50 week moving average (the dark blue short line).

FB weekly

 

 

Tags: $FB $QQQ 

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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