I am getting tired of going after Facebook (FB), but I continue to maintain that Facebook is one of the best longer-term short opportunities in the market. I have outlined it here. Why Short Sellers Should Drool All Over Facebook

Zuckerberg to Wall Street: Be Patient, Big Things Take Time

“What we decided was that over the long term, the ads and monetization would perform better if there was an organic interaction between people using the product and businesses,” Zuckerberg said.

I had a good chuckle over that one. I guess Facebook deserves more time, but not when their P/E is at 95 or when their market cap is higher than GE’s. At that price they are nothing more than an incredibly overpriced pure speculation.

The primary thing investors must understand here is that Facebook is already feeding them promises. Maybe Instagram will reach 6 Billion users, maybe Oculus will change the way we live, maybe Facebook will grow at 20% per annum over the next 20-30 years in order to justify their current valuation. Or, maybe it will go the way of MySpace.

Point being, don’t buy the hype if you value your money. Instead, consider profiting on the short side.

Mark Zuckerberg Begs For More Time At P/E Ratio Of 95  Google

Even though Facebook (FB) reported very impressive results for Q1 ($2.5 Billion in revenue and 72% growth y-o-y), the only place it’s stock price is heading is south….way south. While we can talk about the fundamentals, growth projections, user engagement, mobile Vs. PC, acquisition, new revenue streams, etc…… none of such things are relevant to what will happen to Facebook’s stock price over the next 2 years. Here is why……

• Highly Speculative & Overpriced: Facebook is selling at about 20 X revenue. I don’t care what the growth or it’s future is, this valuation is extreme. Just as a reference point, two other highly overpriced and speculative companies, Apple (AAPL)  and Tesla (TSLA) are selling at 2.6X  and 12X revenue. Putting Facebook in a league of it own.
• We Are On A Verge Of A Massive Bear Market: Based on our mathematical and timing work the bear market of 2014-2017 is about to start. When it starts it will very quickly retrace most of the gains accrued over the last few years. High flyers like Facebook will suffer the most. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE

In conclusion, based on a simple premise above we believe that Facebook (FB) will see the $20-25 range over the next two years. Basically, at today’s valuation levels, their growth story becomes inconsequential.  As you can imagine, right now would be a good time to sell or better yet, go short.

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Shocking Secret Revealed: Why Facebook’s Earnings Are Irrelevant & Why It’s Stock Price About To Crash Google

Reuters: Facebook’s next growth engines still warming up

By Alexei Oreskovic

SAN FRANCISCO, April 23 (Reuters) – Facebook Inc has a message for Wall Street: Don’t expect new revenue streams anytime soon.

The world’s No. 1 Internet social network delivered its strongest revenue growth in several years during the first quarter, as its mobile ad business gained steam.

But even as Facebook gave investors the good news, buoying its stock by roughly 3 percent in after-hours trading, the company made it clear that other money-making efforts such as video ads and ads within its Instagram photo-sharing app would not bear fruit in the near future.

“That will probably be the most disappointing statement to come out of the call,” said Macquarie Research analyst Ben Schachter. “Many folks were anticipating a next leg of growth.”

Facebook Chief Operating Officer Sheryl Sandberg told analysts on a conference call on Wednesday that Instagram ads, video ads and a nascent mobile ad network were all still in experimental phases and that none of them would make a meaningful contribution to revenue in 2014.

That may dash the hopes of some investors, who had expected Instagram to start generating revenue two years after Facebook acquired it for $1 billion.

“We’re very focused on consumer growth, and we move slowly and deliberately in monetization,” Sandberg said, referring to the limited number of ads on Instagram. “We don’t see the need or the urge to ramp this as quickly as we possibly can.”

Facebook is also going slow with auto-play video ads. Facebook said earlier this year it would allow a small group of advertisers to display 15-second video ads on Facebook, but Sandberg said on Wednesday the company was still gauging users’ response and was in no hurry to open the service up broadly to advertisers.

The comments are likely to cause financial analysts and investors to re-appraise Facebook’s near-term prospects. In notes to investors released prior to Wednesday’s earnings report, Morgan Stanley estimated that video ads could contribute $900 million to Facebook’s top line this year, while Cowen & Co targeted $1 billion in video ad revenue.

Shares of Facebook remained up in after hours trading, even after the company warned that its advertising revenue growth would slow throughout the year, as it faces tougher year-on-year comparisons.

Investors are willing to give Facebook some leeway, given its strong performance building the mobile ad business, said Macquarie’s Schacther.

“They’ve earned the benefit of the doubt, that even if it doesn’t come this quarter, or the next quarter, that it will come,” he said of the company’s additional revenue opportunities.

TURNAROUND

Facebook’s newsfeed ads, which inject paid marketing messages straight into a user’s stream of news and content, have ignited Facebook’s revenue growth and bolstered its stock price during the past year. The ads are ideally suited for the smaller-sized screens of smartphones and other mobile devices.

Facebook said mobile ads contributed 59 percent of its ad revenue in the first quarter, up from 30 percent in the year-ago period. Facebook’s overall revenue grew 72 percent year-on-year to $2.5 billion in the first quarter, above the $2.36 billion expected by analysts polled by Thomson Reuters I/B/E/S.

Facebook’s first-quarter results underscore how far the company has come since its rocky 2012 initial public offering, when concerns about slowing revenue growth cut its stock price in half. At the time, investors questioned Chief Executive Mark Zuckerberg’s commitment to the financial side of the business, spooked by the hoodie-wearing founder’s comments about that Facebook does not build services to make money, but rather that it makes money to build better services.

Many of the key investor concerns about Facebook’s ability to transition its ad business to mobile phones and a perception that consumers were cutting back their time on the social network have been dispelled, said FBN Securities analyst Shebly Seyrafi.

He noted the proportion of Facebook users who access the site daily increased to nearly 63 percent in the first quarter, up from 61.5 percent at the end of 2013.

“If you look at user growth, engagement rates and monetization, the three key levers of value, Facebook delivered on all three,” he said.

While Seyrafi said he believed Instagram has the potential to turn into a near-term money-maker, he said he was not concerned by Facebook’s comments.

“All these things are new shoots of growth for the company,” Seyrafi said. “But I think that they want to deliver first and report it afterwards, rather than guiding beforehand.” (Reporting by Alexei Oreskovic; Editing by Richard Chang)

According to recent regulatory fillings, Sheryl Sandberg, Facebook’s COO and an official #2, sold over half her stake in the company. A number of “fundamental” reasons were given, but as the saying goes, money talks and bullshit walks. 

So, the question is…..is it time to sell or even short Facebook? 

It is. First, Facebook is highly speculative and overpriced. It’s valuation is nowhere near reasonable (even if massive growth materializes) and I believe that today’s price is indicative of a speculative bubble within it’s shares. In addition, Facebook left a large gap around $25 in July of 2013 that it must close before any sustained rally in it’s share price can take place. Finally, as per our mathematical and timing work, the bear market of 2014-2017 is nearly here. When it starts, most speculative issues, such as Facebook will decline at X multiple to the overall market. Forecasting a large, 50-60% drop in its share price over the next 2 years.

Once you find a good entry point, it would make a lot of sense to go short here. One thing is for sure, I wouldn’t be holding any shares long. If you would be interested in learning when the bear market of 2014-2017 starts (to the day) and it’s internal composition, please Click Here. 

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Warning: Facebook’s #2 Sells Half Her Shares. Time To Short?  Google

FT Writes: Sheryl Sandberg slashes Facebook holdings

Sheryl Sandberg, Facebook’s number two executive, has shed more than half her stake in the social networking company since its initial public offering less than two years ago, according to an analysis of recent regulatory filings.

The series of disposals, some of which were made to satisfy tax bills, are likely to add to persistent questions about whether Ms Sandberg is eyeing an eventual departure from the company for a future in government or as head of another large company.

However, her name has yet to be closely linked to any senior corporate positions and she has denied any plans to compete for political office – most recently in January, when she said that politics was “not for me”.

Also, even after the disposals, Ms Sandberg’s stake worth about $1bn still makes her one of the largest individual investors in Facebook with a 0.5 per cent stake.

As chief operating officer, the former Google executive was brought in at a critical time in Facebook’s development, when the company was first looking to ramp up its revenues and a young Mark Zuckerberg was still trying to find his feet.

The Facebook chief executive has since developed a greater management self-assurance and taken on many of the company’s key decisions, for instance in his personal handling of deals such as the acquisitions of WhatsApp and Instagram.

Ms Sandberg has frequently been talked of as a candidate for high office in Washington. A former chief of staff to Larry Summers at the time he was treasury secretary under Bill Clinton, she was said to have been considered for that position during the first Obama administration.

Ms Sandberg has sold about 10m shares worth some $400m since Facebook made its stock market debut in May 2012, according to filings with the Securities and Exchange Commission. The sales were made under the “blind” trading plans that corporate executives use to spread their disposals out over a period of time, reducing the risk of being accused of trading on privileged information.

She also sold nearly 16m shares in late 2012 to settle a tax bill that fell due when restricted stock she had in the company vested to become ordinary shares.

Along with a number of other small disposals, that has taken Ms Sandberg’s overall stake down to 17.2m shares, restricted stock units and options in the social networking company. At the time of the IPO, she held about 41m shares, most of them in the form of restricted stock units.