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10 Expert Takes on Facebook Stock at $19, Half the IPO Price


Is now the time to bite? These investing professionals are not convinced.


Destined to Take Second in Mobile, Facebook's Reward is Coming
By Sean Udall

First, is it any wonder that "Facebook CEO Mark Zuckerberg Won't Dump Stock for 12 Months"? I'm not surprised by this announcement at all. I'm also not surprised to see the stock responding, though it's pretty muted thus far. In short, I think I'm on the right side of this name and I have Gene Munster on my side. I also think the vast majority of the $20 - $25 targets (and lower) on Facebook will be scrambling hard in the coming weeks/months. To me, this echoes the action in Fusion-io (FIO) as many analysts lowered targets just because that stock price was falling. In my view, the worst reason for a price target adjustment is due to a stock's price action. Yet that's why most of the adjustments occur. I remained convicted in my thesis that Facebook will exhibit a strong number two position in mobile ad/geo location based advertising behind Google, and the stock price will be rewarded accordingly in the future.

Moreover, I have long thought that most are asking questions when analyzing this stock. Here are mine:

  • What if the company gives me and other business users a reason to use it? What is the stock worth then? I'll note the industry groups that use blogging as an active strategy say the Facebook link-throughs are without equal.
  • Isn't Facebook going to be a lot more powerful on the R&D front with $11 billion - $12 billion in cash, rather than $1.0 billion -$2.5 billion?
  • How hard would it be for Facebook to enter and really hurt the competition in the professional job board market?
  • Is the pending IPO lockup expiry important, or is it actually the amount of shares that insiders choose to unload?
  • Are we not approaching the release or announcement of the release of the Facebook phone... oh, I mean, the iPhone 5.
  • What is the potential for a Facebook launch in China?
Bottom line: For me, the question of the "success" of Facebook was never the major issue. It was always about valuation. As stated some months back (before the IPO), at $155 billion - $170 billion or higher, it's likely a huge short. But now, at around a quarter of that figure, it looks just the opposite. Positions in GOOG, FIO, FB.

Sean Udall is an Investment Strategist, Portfolio Manager and Proprietary Trader with extensive experience across a wide variety of asset classes, including equities, fixed income, currencies and derivatives. He's a recognized trader, prolific writer and the founder of the TechStrat Report, a Technology Focused investment newsletter at Minyanville. Read more of Sean's commentary, here.

Social Mood Suggests Facebook Has Limited Upside
by Peter Atwater

In Moods and Markets, I talk about how you often see acts of sacrifice at major bottoms, and I couldn't help but wonder on Tuesday whether Mark Zuckerberg's formal announcement that he would not be selling shares fit that definition.

Peter Atwater is the President and CEO of Financial Insyghts LLC. Through Financial Insyghts, Peter helps his clients better understand the issues affecting the financial services industry (particularly credit, regulation and accounting) and their impact on the economy. He is also a frequent contributor to Minyanville; read his recent articles, here.
Twitter: @Minyanville

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No positions in stocks mentioned.

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