One of the most viewed stocks is
. From its peak shares are down 42%, but up nearly 50% from its 52-week low. With just a few trading days remaining for tax-loss selling for 2012, investors need to consider exiting their position on Facebook. There are three things to consider.
Facebook rallied from the teens first reached in September 2012. Since proving to the market that its new projects could grow in revenue, Facebook now has a
Price of Profitability of 67
. Investors still nervous about its valuation have a reason to be worried: advertising spending could moderate in 2013. Rising income taxes and lower government spending in the United States will make it difficult for the company to sell more ads.
To boost revenue, Facebook is testing the effectiveness of charging users $1 to message users not connected to them.
Analysis and Conclusions
Facebook is treading on a high level of distrust with its users. This will limit enormous revenue growth potentials for the company. As Facebook keeps looking for ways to grow at levels seen pre-IPO, investors are holding on richly-valued shares. The three things mentioned need to be considered. Investors should decide if shares bottomed, or if the rally was temporary.
Business Section: Investing Ideas
Facebook, LinkedIn, and Yelp are the most popular companies in the social networking space: