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A Facebook sympathy play that's trading around $1 a share is
FriendFinder Networks(FFN), an Internet and technology company providing services in social networking and Web-based video sharing. FriendFinder Networks operates several of the most heavily trafficked websites in the world, including PerfectMatch.com, AdultFriendFinder.com, Cams.com and FriendFinder.com. The company boasts that since 1996, 528 million users in over 200 countries have registered on its Web sites. This stock is off to a hot start in 2012, with shares up around 50%.
FriendFinder Networks has a market cap of $36 million and an enterprise value of $480 million. This stock trades at a reasonable valuation, with a price-to-sales of 0.12. Its estimated growth rate for the next quarter is 230%, and for this year it's pegged at 266.7%. This is far from a cash-rich company, since the total cash position on its balance sheet is $23.36 million and its total debt is $470.79 million. The total cash per share for FriendFinder Networks is 74 cents.
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The way to play FFN off the Facebook IPO is to buy the
breakout trade. That trade will hit once FFN takes out some near-term overhead resistance at $1.34 to $1.37 with high volume.
Traders should look for long-biased trades off a sustained move or close above those levels with volume that's near or above 543,626 shares. If we get that action soon, this stock could easily proceed to take out its 200-day moving average of $1.69 and potentially hit $1.90 to $2.50 a share. I would simply avoid this stock if it takes out some major previous support at $1.00 a share with heavy volume.
FriendFinder Networks is a favorite of the bears since the current short interest as a percentage of its float is a whopping 19.5%. If traders pile into FFN for a Facebook IPO play then the upside potential here is tremendous due to that high short interest and the fact that this stock has a float of only 8.2 million shares. This stock could short-squeeze big if it triggers that breakout over $1.34 to $1.37 a share with volume.