Yesterday’s two articles on Facebook Stock looked at Weekly Put Selling using the Shark Strategy. After earnings came out I thought Facebook Stock could by my valuation method, end up in the mid-teens. I also looked at rescue strategies for my Facebook Stock Aug 3 $22 and $21 strikes that may well up in the money if selling intensifies, however there are a number of items I did not see in the financial report.
This morning I received an e-mail from a reader who is a financial analyst with a large American firm. He has agreed to allow me to print part of his e-mail. Information in (brackets) has been added by me.
What A Reader Says About Facebook Stock
“The notion that Facebook Stock is going into the mid-teens is nonsense at best. While I applaud your valuation calculations, what most retail investors always fail to understand is the valuations being done are on future prospects. Amazon Stock is in your valuation model terribly overvalued where for investors they are in agreement that it is not. It is the future that investors are buying, not the present. Your weekly Put Selling using your Shark Strategy is by the way an excellent example of thinking outside the box. I have purchased your Shark Strategy and find it refreshing, enlightening and profitable. Facebook is not about today, but about tomorrow. RIMM is an example of a company in decline where Facebook is about a company in growth and the same can be said about Amazon. If Facebook Stock ever hit even the high teens over the next few months I would be a large buyer. You may want to read the full Facebook revenue report (available through this Facebook Stock link) to see the growth in subscriber base worldwide and revenue along with new revenue streams that are underway. Your calculations are done on Facebook never growing their revenues. This is far from the case.”
Facebook Stock Second Quarter Results
I read the Facebook second quarter report before writing my second Facebook Article. I can see the growth in subscribers and the growth in revenue so perhaps I was hasty in my valuation. But then that’s the beauty of Put Selling. I do not always have to be right and the chance of being right all the time is tough in any market, bull, bear or sideways.
I thought I would share these images which I pick up over Techie-Buzz.com where author Joel Fernandes wrote an excellent article looking at Facebook Stock and the second quarter earnings. You may want to give it a read.
Facebook Stock Revenue Growth Chart
Stock Investment Chart showing Facebook Stock Revenue Growth
Facebook Stock Users Growth
Stock Investment Chart showing Facebook Stock Growth in Users
Put Selling The Weekly Facebook Stock Put Options
As a Stock Investment I would not be interested in Facebook Stock. But for weekly Put Selling the stock is excellent and again because I use the Shark Strategy I am committing such little money that it makes hardly an impact on my overall portfolio.
No Facebook Stock Naked Calls Yet
However after reviewing the earnings growth and the overall question of whether Facebook Stock down the road is a great Stock Investment I must admit that right now I will not be doing any naked calls. It is far better to leave Facebook Stock for a week or two and give the stock time to settle. Eventually it will point its own direction.
Stock Investment In Facebook Stock Summation
To sum up this article I want to thank the reader who emailed me. This morning Facebook Stock is holding above my two put strikes of $21 and $22 for Aug 3 which shows the value in selling the weekly puts. I am also holding the July 27, $22 and $21 naked puts which I sold last week and they would appear to be on the verge of expiring.
This goes to show the value of selling far out of the money puts as an investment strategy in stocks that just do not meet my Stock Investment grade. Facebook Stock may someday be worth a lot more money but through Put Selling the weekly put options and having a sound strategy to fall back on, in the end I may earn more than those investors who buy Facebook Stock today as a Stock Investment and hope for tomorrow.