This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Why Facebook May Have Reached a Bottom

Stocks in this article: FB AAPL RIMM GOOG

NEW YORK ( TheStreet) - As hard as it may be to believe, I have always wanted to like Facebook (FB).

However, as a value investor, finding the right opportunity to "like" Facebook has always come as a great challenge.

Recently, upon its somewhat disappointing earnings results, I've tried to make it a value play by offering this argument: Should its stock continue to drop, it might soon become an acquisition target of Apple (AAPL), especially considering the two companies are already great friends.

What's more, there's the possibility that Facebook might acquire Research in Motion (RIMM). Its business and sustainability is now heavily predicated on its ability to perfect mobile ad revenue. Facebook would instantaneously become a hardware and services company, putting to rest all of its critics who doubt the value of social media.

However, this time I think there are more compelling reasons to consider the stock -- none more important than the fact that it just might have reached bottom. This is despite others stating that "bottom-revealing" scenarios have yet to play out. For that matter, calling it a "near-term bottom" is not entirely out of the question.

After all, its fundamentals have yet to change. But who says that changing fundamentals is a requirement for a potentially great trade?

When Facebook reached its 52-week low last Thursday at $19.82, the stock had bounced as high as 13%. What's more, it closed that day at $20.04. While not an entirely revealing platform, what it shows is there is strong support at $20.

If you recall, the stock reacted precisely the same when, upon its drop from its $38 initial public offering price, it bounced near the $25 mark to then reemerge above $30. Am I suggesting this is what is going to happen this time? Not entirely. But the patterns are pretty telling.

As Facebook continues to be an anomaly, it would not be surprising to see the stock approach $26 over the next couple of weeks.

For that matter, it is worth noting the company has just received an upgrade by Bernstein from sell to hold with a price target of $23, representing a P/E of 64-times next year's earnings and a premium of 15% from current levels.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs