FB finds a new home, deep in the paint where life is much harder, and physical. Welcome to the REAL.
FACEBOOK IS NO LONGER A ROOKIE, OR A DARLING. LIFE IS REAL NOW AND EVEN MORE REAL THAN BEFORE. WHEN YOU’RE SCRUTINIZED FOR UNDEMOCRATIC ACTIVITIES CONGRESS BEGINS TO PAY ATTENTION. THE LOVE IS OVER, ALL TRAINING WHEELS OFF, AND THE PRESSURE FULL ON. SO YOU SAY YOU ALWAYS WANTED TO BE IN THE NBA?
Soliloquy for a falling star. It’s raining so hard we can’t see the streets. Your halcyon days of carefree childhood have matured and now accumulate. The government’s looking, and talking. Now you seem unreachable. We loved you when you were new. We’ve put up with your antics, and hubris. And really, did we ever expect you to “protect” our privacy?
Learning penitence in Menlo Park. Where’s Mark? Spection’s coming for sure, both inspection and intraspection.
“Sweet FA we have a real business credit card,” our manager concludes prior to stuffing his phone away. Our preparations are complete and we arrive back at the building sporting a self-satisfied state of empowerment. We push past knots of muttering residents.
“Listen,” he says “you know it’s late for apologies. The human angle will from now on read as open pandering. And you’re unsure, and that’s normal.” He glances back over his shoulder.
Days ago the market spoke. FB suffered a cut back, much like when an electric utility chops trees back from distribution lines. More of that is on the way.
“And two days ago FB closed up over 2.6%, on double volume–against the 5-Day average.”
I nod, as volume is the lie detector test for market goods.
“Yes, and it promptly fell back yesterday. Let’s expand our view,” he pauses a pair of palms skyward, before resuming. “Facebook’s days of awe and wonder ended years ago.
Facebook has been around for so long that half of the people in this country have never known life without it. They pioneered the process of monetizing social and mobile. Two billion people use it. That’s a very wide moat. It will require more than threats or #s to crimp that revenue hose. But do you buy, or sell?
Fact. Beelzebub could be hunkered right behind the wall socket and most Americans, or FB users, wouldn’t care. Few will stop using Facebook over the use of their data for political purposes, even if it was improperly accessed. If function, FB is a utility. Do you actively care, or even know, who’s behind your breaker box? You remember Beelzebub, FB friends with Baal.
The new utils. “The Slouches;” Cable, Beelzebub, and Facebook. Water ‘s free, once you prove you can pay for the first three. That’s supposed to be video not water.
“Think about it,” my manager says. “Problems vary in quality. We know that. They also vary in severity.” He stares over, scanning.
“There was no disruption to services. Although work histories were included in the commandeered data, there were no credit card numbers.”
“Where you going to go anyway? No platform competes with Facebook. All other mediums are substantially very different experiences.”
“And the switching costs,” I point. “Deleting an FB account is not the same as ‘deactivation.’ Complex webs can not simple be shifted. Moat.”
O.K. not that it was ever a secret but… STOCKjAW did highlighted regulation risk last year in CROOKED HOURS.
“There’s now an odd and ill whisper that fills the lobby. Have you noticed that?” she leans back. Two women occupy the plush bench seating near the elevators. Again she leans in.
One superbly dressed surrenders to a prescription bottle.
Our manager hands back the prescription bottle–now open. The woman gracefully receives it, thanking in expression while not missing a beat.
“He doesn’t pronounce any longer,” her hand wisps. “One used to hear both ts when he said ‘little problem.’ Now he seems always to be humming.” Her gaze and whisper narrow, “And that frightful thing he suddenly sneaks behind his back–”
“Must be the missing finger.“
“The sun’s coming up and he has to drop his pants to get outta there.”
I actively ignore our manager “We’re holding our position in Facebook. It will bounce and even go up.” I hear his shouting from down the hall.
“Just remember. March Madness is full of life lessons.”
Well, and yes. That much has always proved true.
“Look at the Tournament now. Who’s gone already? North Carolina, Michigan State, Virginia, Arizona, Wichita State, Cincinnati, Texas A&M, and Kentucky–put out by who? Kansas State.”
Of course this is all true. And his point applies, in that big names can and do go down right along side all others.
Two of the last three days FB has rebounded hard, on massive volume, 2X on the first. That of course is what we call support. But the charts are solidly against FB, now priced below both 50d and 200d moving average. The chaikin Money Flow, and both MACDs, are all pointed down.
NPR presented an interview with the Democratic senator from Minnesota concerning the 50 million FB profiles provided to a Steve Bannon group, Cambridge Analytics. Some have viewed this as a security breach, while others see it as a violation or users privacy.
Regardless of definition, FB now has the attention of congress. Guess what? Politics 101 teaches power mongers how to cynically use American companies as targets around which to create outrage, and thus political profile. We intentionally omitted the congressional name here for precisely that reason.
STOCKjAW is holding on to Facebook for now. Public reaction is unpredictable, yet typically does not last. Market reaction is underway, and alone is no reason to sell. Any selling we do will happen after institutional money flows back to the stock, and it will.
IF YOU’RE LONG TERM, CAN TOLERATE THE DISRUPTION, AND TRUST ZUCkERBERG AND SANDBERG, UNDER CIRCUMSTANCES NEW TO BOTH.
Nonetheless, Facebook is in danger: declining readership among the young, declining engagement in total, increasing scrutiny surrounding horrific/inappropriate content, calls from users and advertisers for change, slowing digital advertising growth, talk of taxation in Europe, increasing costs, the Russia investigation, perceived arrogance, Cambridge Analytica, an endless history of meaningless privacy policies…
WAIT FOR A BETTER PRICE. WE ARE HOLDING AND WATCHING.
FB, 47% REVENUE GROWTH RATE. THAT HELPS PROVIDE SOME PATIENCE RIGHT?
Our manager walks in as I toss tea leaves into the bowl. I flush. He holds a finger level.
“But then, where else is everyone going to go?”
Thanks for reading. Keep looking.