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
TheStreet Open House

Considering Facebook As A Tax Loss Sale

Stocks in this article: FBGOOGGRPNLNKDNFLXYELP

One of the most viewed stocks is Facebook (FB). 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.

Valuation

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.

Instagram

The immediate uproar over Instagram’s change in its Terms of Use (“TOU”) reminds investors that the company will have difficulty monetizing its most valuable products. After Instagram changed its TOU to give itself the rights for advertisers to use its photos, the company reversed its position. The company initially gave itself the right to share user information with Facebook, outside advertisers, and affiliates. The only way for a user to opt out was to delete the account.

$1 Messaging

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:

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
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 16,472.23 +72.56 0.44%
S&P 500 1,911.97 +7.96 0.42%
NASDAQ 4,359.2290 +43.1550 1.00%

Brokerage Partners

Rates from Bankrate.com

  • 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