Apparently I am not the only person out there who might be short selling Facebook’s (FB) stock. Unsuccessfully, thus far, I might add. Other speculators are beginning to pay attention as well. A Short Seller Unfriends Facebook (FB)
The short seller, whose note on Valeant Pharmaceuticals International Inc. (VRX) last year was responsible for a steep drop in the company’s stock price, is bearish on Facebook’s future. In an interview with Bloomberg, he said Facebook “could underperform the rest of technology stocks this year.”
My view about Facebook (FB) remains the same. It is incredibly overvalued stocks and probably one of the best short opportunities out there.
Open any financial media outlet today and you will find Facebook (FB) being praised. Just as Apple was at its top exactly a year ago. For instance, Cramer: Facebook’s most picture-perfect quarter ever for tech
Nonsense. The reality is, Facebook (FB) is massively overpriced and in a speculative bubble. Regardless of its guidance beating performance.
Now, I have to admit something. I hate Facebook with passion. First, it is a cesspool of pointless narcissistic activity. Not for everyone, but the % is high enough. But, I have learned a long time ago not to make “emotional” investment decision. That is why it warms my heart to see Facebook (FB) at such dizzying valuation levels.
Here is why I believe short sellers should drool all over Facebook (FB)
When Twitter (TWTR) was selling at $48, I wrote this….Why Twitter (TWTR) Should Go On Your “Stocks To Short” List Less than a year later it is trading 60% lower. With that in mind, I continue to maintain that the worst is yet to come for the company. By the time upcoming bear market ends, Twitter should be below $10.
With that in mind, I believe Facebook (FB) presents us with even a better shorting opportunity. In fact, I continue to believe that Facebook is one of the best shorts out there.
And while most investors today will laugh at me when I suggest that Facebook (FB) will see $20 a share over the next 3 years, I will laugh back when it does. I promise. Here is why……
- As discussed over the last few days, Facebook is massively overpriced. At its $320 Billion market cap, the company is now worth more than GE. At 10th the revenue base and a P/E of 95. I guarantee you, investors in Facebook today will look back in 2-3 years and wonder “What the hell were we thinking?”.
- I am beginning to notice quite a bit of fraudulent activity on Facebook when it comes to likes, promotions, paid advertising, etc… That is firsthand knowledge, but you can Google the same and do your own research. That suggests the Facebook is running out of growth and its multiple is not justified. By a long shot. I wrote about it here Why Facebook Remains An Amazing Short Opportunity
- See those massive gaps all the way down to $20 a share? Yep, they will have to be closed at some point.
- We are on a verge of a multi-year substantial bear market. Click Here. When such bear markets develop, if past is any history, such overvalued and over hyped stocks tend to lose 80-90% of their value. Just as the gaps above suggest. I don’t know why this time would be any different.
- Short interest is low.
Finally, even at $20 a share, Facebook will be extremely overpriced. In other words, I just gave you a potential 80% gainer, but its up to you what you do with it. As always, TIMING is the key here. With that said, if you are willing to hold this stock short over the next two years while riding out all of the ups and downs, your gains on the short side should be significant
