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Hooray for Facebook -- and I'm Selling

That law says that an object in motion will not change its velocity or direction unless acted upon by an external force as powerful or more powerful. That "force" may be FB's selling volume.

Thursday's trading volume by 2 p.m. EST was over seven times the average daily (three-month) volume of 37,580,200 shares. It may be nine times greater by the close. Volume accelerated when FB hit its intraday high of $34.

As the chart below corroborates, the share-price ride for FB shareholders during the past 12 months has been disturbing from a gastrointestinal perspective. Some days it was blamed for acid reflux. FB ChartFB data by YCharts

In the last quarter, sales at FB grew 53% to $1.81 billion from the year-ago same quarter. Sales profits were goosed by a big increase in mobile and local ad sales.

FB posted a profit for last quarter of $333 million, or 13 cents per share. Its mobile advertising business increased by 75% and was a big contributor to sales growth. It made up 40% of FB's ad sales.

It's hard to compare Facebook with other companies. The closest comparison might be LinkedIn (LNKD), which reports its latest quarterly earnings after the market closes on August 1.

LNKD shares are trading above $200, at a PE ratio of an astounding 793. That means the stock sells for approximately 793 times what it earns per share (EPS).

That beats Netflix (NFLX), which trades at 604 times earnings. The chart below illustrates the one-year price movement of both stocks. LNKD ChartLNKD data by YCharts

Visionary investors who purchased shares of LNKD last September have 100% plus gains. NFLX investors who may have purchased at the same time at around $60 a share have over 400% gains! Amazing!

Since I'm not one of the investors who purchased either LNKD or NFLX last September, I'm qualified to be one of those "drips under pressure" (ex-spurt) when it comes to whether to hold or sell Facebook.

Thus I encourage you to do what you believe is best with FB and don't do as I did just because I did it. There are scores of articles out there with opinions, statistics and biases to compare to mine.

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