Infant Terrible?

Not to say that we all loved Facebook – but we were all quietly using a seemingly fantastic, free, social communication platform. Of course, we all knew there was no such thing as a free lunch, but perhaps the price we are now realising we will pay is much higher than we could have ever imagined…

Not only have we been putting our personal security at risk, but we are now advertising fodder, as well as potential political ammunition.
Maybe there is more to the freebie Facebook than we suspected.
And what lies ahead?

If we look at the charts, we can see that not only are we mere mortals starting to ask questions about the credulity of Facebook, but I also daresay big Instos are starting to ask questions.
Is Facebook now a monster out of control?
Profit at the expense of security and integrity many might say.

Without mentioning names, maybe many major shareholders are starting to doubt whether the first level management team really know what is going on inside. There have now been too many recent surprises which management have been unable to provide spontaneous and convincing responses on.

The market is not satisfied yet and will keep selling till they have plausible answers.
This is reflected in the price and volume action over the last four months.
A daily chart paints the picture of a stock in decline and when we look at OBV we can see this is a volume driven decline.

Does this suggest that there is more fallout to come?

We see range trading ahead, but we do not see any massive desertion of the stock within the weekly context.
Because large investors are there for the long haul and despite there being some disquiet from consumers – this matters little – as the company charges ahead on its profit driven path.
Maybe a little more may be spent on security, but if the company delivers, the long-term outlook is highly attractive – so says the monthly chart with a wave five high on the horizon – albeit 3-5 years away...

Enjoy the ride

Tom Scollon