Futures down…but down most on NDX because of Facebook. This after a strong day yesterday because of TRUMP/EU potential trade deals.
“Gary…I have owned Facebook for a while but giving back most of my gains this morning…should I sell!”
I will never tell people who email me to sell or buy and the same goes for social media…for obvious reasons. Things change and if someone asks me about something today, things may change in a week.
But thought I do some explaining how stocks work.
There was no way of knowing Facebook would, as of this writing, be down $44 from yesterday’s close…more than 20%. I do not own the stock this second. I would have been thrilled with it before the close yesterday and unhappy after the close. My best advice is pick a number YOU are comfortable with and decide for yourself. The biggest issues I see Facebook having right now are:
Because of the stock’s success, it has become over-loved, over-owned and over-leveraged. Most growth funds, big , medium and small, own a ton of the stock. They have not even started their selling because the stock is gapping down. We suspect they will first hold on for dear life but continued weakness will beget even more weakness as they will start selling. We suspect it important the stock takes a stand sooner rather than later.
Facebook has become a controversial company. This is not a problem when the stock is going higher. It is a problem when the stock is being hit. Arguably and maybe not, Zuckerberg was less than truthful when on Capital Hill. On top of that, many believe the company has completely gone away from what Zuckerberg said years ago…that they would not sell user data. Sorry, everything about the company is based on user data.
Because of recent controversies, Facebook is going to make it easier to say bye-bye. In the past, it felt like it took an act of God to get rid of Facebook.,
It is not arguable the younger generation is not as enthralled with the application as others. The company will need this generation to get on board.
Growth is slowing…and looks like it will continue to slow. Going from a high growth company to a not-so-high growth company is not good news. Just remember, once a company gets so big, it is tougher to grow the business. In the past, Coke, Wal Mart and others were high growth companies. The good news is that growth is still strong, just less strong.
We have no blood in the game right now but know how a growth stock becomes not such a growth stock. Will be watching closely as this name has been a major influence on the NASDAQ/NDX as well as all of growth stock land.