One of the most-viewed stocks on Kapitall is Facebook (FB). From its peak, shares are down 42%, but up nearly 50% from its 52-week low. With just a few trading days remaining for tax-loss selling for 2012, investors need to consider exiting their position on Facebook. There are three things to consider.
Facebook rallied from the teens first reached in September 2012. Since proving to the market that its new projects could grow in revenue, Facebook now has a Price of Profitability of 67. Investors still nervous about its valuation have a reason to be worried: advertising spending could moderate in 2013. Rising income taxes and lower government spending in the United States will make it difficult for the company to sell more ads.
To boost revenue, Facebook is testing the effectiveness of charging users $1 to message users not connected to them.
Analysis and Conclusions
Facebook is treading on a high level of distrust with its users. This will limit enormous revenue growth potentials for the company. As Facebook keeps looking for ways to grow at levels seen pre-IPO, investors are holding on richly-valued shares. The three things mentioned need to be considered. Investors should decide if shares bottomed, or if the rally was temporary.
Business Section: Investing Ideas
Facebook, LinkedIn, and Yelp are the most popular companies in the social networking space:
1. Facebook, Inc. (FB, Earnings, Analysts, Financials): The Company develops technologies that facilitate the sharing of information through the social graph, the digital mapping of people’s real-world social connections. Market cap at $59.27B, most recent closing price at $27.36.
3. Yelp, Inc. (YELP, Earnings, Analysts, Financials): Operates a directory services and social networking website. Its online community provides information on urban city guide. Market cap at $1.2B, most recent closing price at $18.91.
LinkedIn and Yelp are Facebook’s primary competitors. Google (GOOG) and these others are also considered a competitor:
5. Netflix, Inc. (NFLX, Earnings, Analysts, Financials): Provides subscription based Internet services for TV shows and movies in the United States and internationally. Market cap at $5.19B, most recent closing price at $93.50.
6. Groupon, Inc. (GRPN, Earnings, Analysts, Financials): The Company provides daily deal on the stuff to do, eat, see and buy in more than 500 markets in 44 countries. Market cap at $3.14B, most recent closing price at $4.79.
Written by Chris Lau. To interact and discuss these picks or picks of your own with users, attach your watch list or portfolio in a message to your friends on Kapitall. To connect with users on the leaderboard: fromyour tool bar, select Get Connected -> Top Kaptallists.
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Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- Facebook, Inc. (FB, Chart, Download SEC Filings)
- LinkedIn Corporation (LNKD, Chart, Download SEC Filings)
- Yelp, Inc. (YELP, Chart, Download SEC Filings)
- Google Inc. (GOOG, Chart, Download SEC Filings)
- Netflix, Inc. (NFLX, Chart, Download SEC Filings)
- Groupon, Inc. (GRPN, Chart, Download SEC Filings)
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