Facebook - $119 Billion Disastrous Conference Call

Posted on by Noah Kiedrowski

Facebook’s (FB) fundamentals were shining bright and outweighed its data misuse scandal from months’ prior leading into its Q2 earnings. In the wake of mishandling user data, Facebook’s stock tumbled from $195 to $152 or 22%. Facebook was well off those data misuse induced sell-off lows and marched right through its previous 52-week high and broke out to $219 for a nice ~44% rebound. This scenario ended abruptly on the heels of its Q2 earnings which came in shy of analysts’ expectations on the revenue front. Facebook also issued a major guide down in growth for the next few quarters tampering growth expectations in the near term. Facebook is facing a challenging confluence of slowing revenue growth, margin compression and stagnant daily active users in the near to intermediate term. Facebook’s CFO stated that investors could expect "revenue growth rates to decline by high single-digit percentages from prior quarters." Despite these headwinds, Facebook is still posting accelerating revenue growth across all geographies, expanding market penetration with Instagram’s IGTV, Facebook’s Stories and monetization efforts in Messenger and WhatsApp. Factoring in this high single digit decrease in revenue, Facebook is still poised to grow at a double-digit clip with the most recent growth rate coming in at 42% in Q2. The long-term picture looks bright for Facebook, and the recent sell-off is a good opportunity to initiate a long position as the company contends with and addresses all the issues across its platforms. Facebook remains a premier large-cap growth stock and inexpensive relative to other large-cap growth stocks in its cohort.

Disastrous Conference Call

Well, that was a disaster of a conference call. Facebook posted the largest one-day loss in market value by any company in stock market history. Facebook shed $119 billion worth of market capitalization after dropping ~20%. No other company has ever lost greater than $100 billion in market value in a single day (Figure 1). To add insult to injury, this was also Facebook’s worst day ever on the stock market. This sell-off came on the heels of a minor Q2 advertising revenue miss of $13.04 billion versus expectations of $13.16 billion and lower than expected daily active users in Europe. Key metrics suffered from data misuse and fake news issues within its platform. Continue reading "Facebook - $119 Billion Disastrous Conference Call" →

Shark Tank's "Kevin O'Leary" Has A New Fund

Posted on by Matt Thalman

Kevin O’Leary is best known for his antics on Shark Tank, but to those on Wall Street, he is known for his more conservative approach to investing. O’Leary started his O’Shares ETF Investment firm back in 2015 and launched the firm's first fund the O’Shares FTSE U.S. Quality Dividend ETF (OUSA). A month after releasing that fund he rolled out two more, the O’Shares FTSE Europe Quality Dividend ETF (OEUR) and the O’Shares FTSE Asia Pacific Quality Dividend ETF (OASI).

His next two ETF’s came in 2016 and 2017 and if perhaps you could guess what phrase was in the name of both of those? Quality Dividend!

The O’Shares FTSE Russell Small Cap Quality Dividend ETF (OUSM) starting trading December 30th, 2016 while the O’Shares FTSE Russell International Quality Dividend ETF (ONTL) began trading on March 22nd, 2017.

The first five funds O’Leary has rolled out focused on companies with strong balance sheets, and that paid a nice dividend, what most investors would refer to as “conservative” investments. But, his newest ETF, the O’Shares Global Internet Giants ETF (OGIG), is a lot less about quality dividends and more about quality business and growth potential. So, O’Leary is still looking for quality businesses, but with more growth opportunity than dividend income like his past ETF’s. Continue reading "Shark Tank's "Kevin O'Leary" Has A New Fund" →

Oil Price Spike Will Most Likely Be Averted

Posted on by Robert Boslego

Uncertainties for the balance of 2018 imply that stocks could fall sharply or be adequate. As a result, prices may spike or drop into the $50s, depending on what unfolds.

President Trump has sway over Saudi Arabia and the other Gulf producers. He can also fine-tune the implementation of sanctions on Iran and waivers to them. I’m expecting he will do whatever he has to, to avert a price spike going into the November mid-term elections.

July Production Changes

OPEC estimated in its August Monthly Oil Market Report (MOMR) that its crude production in July averaged 32.323 million barrels per day (mmbd). That was about 40,000 b/d higher than in June. The “compliance” level with the 2016 deal dropped to 97%, the first time less than 100% in nearly a year.

Saudi Arabia’s production was reduced by about 52,000 b/d, but that was more than offset by gains of 79,000 b/d in Kuwait and 69,000 b/d in the UAE.

Iran’s production fell by 56,000 b/d while Venezuela’s output dropped 48,000 b/d. Libya’s output also dropped by 57,000 b/d. Continue reading "Oil Price Spike Will Most Likely Be Averted" →

Now May Be The Time To Buy A FANG ETF

Posted on by Matt Thalman

The phrase the FANG stocks, which was coined by CNBC’s Jim Cramer, represents five high flying technology stocks, Facebook (FB), Amazon.com (AMZN),Netflix (NFLX), and Google’s parent company Alphabet (GOOG - GOOGL). Cramer coined the phrase because how incredible these stocks where performing when compared to other technology stocks, or the market as a whole. These stocks have been market leaders for a few years, during which time we have seen their valuations go through the roof. But, the old saying on Wall Street, “stick with what’s working” has simply continued to work with the FAANG stocks. Until recently.

Facebook, Amazon.com, Netflix, and Google’s parent company Alphabet have all now reported quarterly earnings for the second quarter and while Amazon, Google, and Netflix didn’t get destroyed like Facebook, the group combined with Apple (AAPL), had lost $185 billion in market value during the last few days of trading in July. This decline had some investors wondering if the FANG rally is over, while others are considering this a good buying opportunity.

I personally am in the latter camp considering Gross Domestic Product figures came in at 4.1%, the recent job reports have all been strong, and despite some issues, mainly caused by those in Washington, all economic data indicates that the US consumer and economy is strong.

Furthermore, a strong case can be made that Facebook hurt itself regarding growth due to changes it is implementing following the data scandal back in the spring. The stock fell 19% in one day after reporting earnings. For the most part, the rest of the FANG stocks reported good quarterly earnings from most points of view, despite perhaps not topping lofty expectations set by Wall Street analysts. Continue reading "Now May Be The Time To Buy A FANG ETF" →

S&P 500: Exhausted?

Posted on by Aibek Burabayev

Last month I shared with you my concern about the possible reversal of the index in spite of the solid gain booked earlier. The chart of the S&P 500 spoke for itself, showing a weakness in the structure of the move up. The angle of the uptrend was too gentle to sustain. And the finishing punch came from the RSI indicator, which had an invisible Bearish Divergence on its chart.

We never know what the future will bring us, although this time the geometry of the double resistance worked just perfect as I assumed another spike to that area of $2860 before a reversal in my earlier post. Bingo! The index peaked right in that area at the $2863 and then collapsed. This is further proof of the magic power of the trends.

Chart: S&P 500 Daily: Watch Support After The Failure At The Resistance

SP 500 Exhausted
Chart courtesy of tradingview.com

This is an updated chart above, which reflects the market changes and shows the outlook of the possible upcoming behavior of the S&P 500. Continue reading "S&P 500: Exhausted?" →