Medium term
Trade view / 01 July 2016 at 11:53 GMT

Time to 'friend' Facebook?

Director / PIA First
United Kingdom

Candlestick pattern: January 2016 saw a bullish engulfing formation following a series of Doji’s.
Most recent support: The stock saw heavy rejection at the $106-108 level (April & June) indicating support in this area.

Stochastic oscillators: The weekly MACD turned positive in February of this year with a cross to the upside and is currently trading near the upper end of its most recent range (albeit weaker of late).

Moving averages: The stock is trading above both its 200 & 50 day simple moving average

Volume: Recent trading has seen volume marginally below the stock's average (24 million on the 50-day, 29 million over 200 days).

Anchor industry and company drivers:

Medium term: Daily active users continues to increase with latest (Q1 2016) figures reporting a figure of 1.09 billion (a 16% increase versus the prior year).

Longer term
: Mobile daily user numbers have also been moving higher, and as of Q1 stood at 989 million (a 24% increase).

Growth: It is PIA’s expectations that global internet usage will continue to grow in the coming years on the back of increased broadband speeds and mobile penetration rates.

Latest Numbers: Q1 2016 Results (published April 27)

Recent results: FB posted a positive set of Q1 figures with revenue (chart above) coming in at $5,382 ($3,543 for the same year ago period) and operating GAAP margins of 37% (versus 26% for the equivalent 2015 period). 

Diluted earnings per share (EPS, see chart below) also saw a positive increase with a read of $0.52 versus $0.18.

Monthly active users: Plus 15 % year-on-year increase to 1.65 billion as of Q1 2016.

Standalone valuation: FB has an Altman Z-Score of 42.34 (a read of >3 generally indicates solid underlying company financials).
Competitor/industry valuation: Trades at a discount to its peers on a number of forward metrics.

Most recent operating net cash: As at Y/E cash and cash equivalents stood at $6,456 million ($4,907m Q4'15). Free cash flow (chart below) was $1,851m versus $1,198m for the prior year period.

Stock sentiment: Currently positive on the name

FB’s is due to release Q2 numbers in late July (date to be agreed).



Buy at current levels (114.25).
For breakout buyers (B), we would highlight $115.50 (mid June 2016 highs).
For pullback buyers (P), we would highlight $110 (late April 2016) with a lower level at $100.
Stop: as low risk market participants we would recommend a hard stop loss at $98.

Target: $125 and $135.

Time horizon: three to six months.

Four-hour chart:

Create your own charts with SaxoTraderGO click here to learn more

Source: Saxo Bank 

Daily chart:
Source: Saxo Bank 
Weekly chart:
Source: Saxo Bank  

— Edited by Michael McKenna

For more on equities click here.

Non-independent investment research disclaimer applies. Read more


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail