Where is Facebook Stock Price Going

Where is Faceboook Stock Price going? Everyone wants to know. Here are a couple of charts that I want to show you with some rudimentary technical analysis. This is the 5 day chart of Facebook stock with the blue line being the stock price and the red line being a Exponential moving average. Generally when the exponential moving average line crosses over and is above the price line, the stock price will drop. The obverse is true. When the stock price is above the exponential moving average, the stock will rise. The buy and sell signals are when the two lines actually cross. (this is rather basic technical analysis).

Friday, the stock closed for the weekend at $19.05. This is the 5 day chart (click for larger image):

This is the same chart, except it is the 30 day view (again click for larger image):

As one can see, the technical indicators show that the stock is on the down escalator, it is on the handcart to hell, and it is dropping like a song on yesterday's hit parade. Where will it end?

In a previous blog post, I stated that my technical analysis shows that the stock will gain some support in the $16-$19 dollar range, but even at that level, the free fall is not over. So what is the true value of Facebook stock? Where is it going?

If you use commonly accepted metrics, then Facebook stock is really worth about $7.25 per share. The freefall will stop against a mountain of reason at that value.

However, my opinion is that Facebook is dead man walking. They sent out announcements of new products, attempts, sales algorithms etc almost daily. These product announcements are like flares from a sinking ship. Facebook is old PHP technology that doesn't adapt well to mobile, and it value proposition to its users, is that it allows one to stay in touch with another in a very lazy fashion. This is not a marketing proposition for users, and that is why Facebook ads generally fail. The folks at Facebook are trying to put lipstick on a pig and sell it.

I am particularly enjoying this because analysts from all over Wall Street (hello Arvind Bhatia) wanted to be media stars and appeared on TV saying what a great buy this stock was at $38. I hope that these analysts don't get bonuses this year.

So there you have it -- a social media platform in the golden years of its quick internet existence is trying to pawn itself off as investment grade. The competitor to Facebook is already on its platform, and Facebook will become the MySpace of the investment world.