Facebook’s continuing to ramp into this mysterious press event tomorrow and at this point, I don’t think there’s much chance that whatever they announce is going to live up to the hype.
They won’t be announcing a “Facebook Phone” despite all the reports to the contrary. They will be announcing new software, video and ad initiatives and probably a sponsorships and other revenue stream concepts. Facebook’s not going to get into the hardware business a la Microsoft and Google and Amazon for many years to come, if ever. They know that their platform needs to continue to be gadget and operating system agnostic.
If you don’t have any Facebook FB +0.27% , I’d still probably look at buying a small tranche to get started. It’s been a heckuva run and surely that alone could make the stock drop after earnings, no matter how good the report. But then again, if you’re looking out to 2015 or 2020 in your time horizon, it won’t matter much whether your cost basis is $28 or $32 if the stock gets to $200 some day. I trimmed some FB calls of my own late last week, so you know where my money and mouth are.
I’m going to sell a bigger tranche of Facebook calls this morning, leaving me with common and mostly longer-dated call options with strikes about $30 or so that I bought when the stock was in the teens. Yes, in the teens.
Here at $32 heading into tomorrow’s call, I want to continue to lock in some of those big gains because it’s always possible that FB sees the teens again of course. Not likely, IMHO, but certainly possible. More likely, I’d expect to see it trade in the high $20s and on up towards $40 before the year is over.
Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at TradingWithCody.com, which is not affiliated with MarketWatch. At time of publication, Cody was net long Apple, Amazon, Facebook and Google. Follow Cody on Twitter at twitter.com/codywillard.
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