Should Investors Buy Facebook Stock Now?

Related Ticker: FB

The most commonly cited reason for selling Facebook stock is driven by technical reasons.

Of course, when a stock is falling, it only seems like it will continue to fall lower.

However, it’s dangerous to speculate and attempt a perfect entry. Many fall prey to buying low and selling even lower when attempting to time markets.

Furthermore, the upside at a $87 cost basis is still pretty compelling, and further deliberation may mean missing out on a longer-term rally.

The fundamentals are solid, and there could be further upside to headline EPS figures in the next fiscal year.

Should investors be buyers of Facebook (FBFB stock? Yes, primarily because recent market selling isn’t likely to be very sustainable due to the lack of broader macroeconomic data supporting any recession probabilities. Furthermore, the argument for selling Facebook these days seems to be more technical than fundamental.

Also see: Amigobulls’ Facebook stock analysis video evaluating the company fundamentals.

For example, TheStreet.com published an article stating the technical reasons for why the Facebook stock would fall further:

Just after reaching new all-time highs on heavy trade in mid-July, Facebook began to consolidate. The stock held in a tight range just above its July 17 breakout gap until the weak open on Aug. 21. This breakdown move confirmed a lower monthly high in August and a complete loss of the upside momentum that had carried shares to new highs three weeks earlier.

Of course, these are rather weak arguments to sell the stock, as it’s one of the few high growth social media names that isn’t trading at astronomical valuations. Generally speaking, I’m highly skeptical of the predictive value of technical analysis, especially when the technical analyst decides upon an arbitrary number for a price target just because the stock is downward trending.

FB technical analysis chart