Why This Strategist Sees New Highs in Facebook Soon

Sean Udall is a monthly guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick. Tune in to the daily broadcast live Monday-Friday at 8 a.m. ET here.

Technology Stock Strategist Sean Udall said this morning that he sees Facebook Inc FB moving to new highs following yesterday's earnings report. He noted that he was currently flat the stock, though in the past it had been his second-largest position.

In regards to today's see-saw price action, Udall said that he sees it as the start of a "tug of war" between traders who liked the quarter results net of foreign exchange and the traders that are questioning whether Facebook's durability with regards to growth will continue.

Regardless, the quarter was good enough that he forecasts a price in the mid- to low-$90 range in the near future. Above that, each $5 price gain will prove more and more challenging, he said.

For Facebook to continue its strong performance, Udall said that the company would have to prove that one of its acquisitions is an unexpected blockbuster. While the Instagram acquisition was "brilliant," Udall is not sure that other acquisitions will prove as insightful. When Udall was long the stock, Facebook made its $20 billion acquisition of WhatsApp, which he says was a "massive overpay." That led him to square his position. He is similarly unsure whether Facebook will recover its price for the Occulus acquisition.

Udall did give Facebook credit for continuing to issue the "big beat," which he thought would be a challenge. Facebook last traded at $84, down 0.75 percent on the session.

Posted In: EarningsLong IdeasNewsTechTrading Ideas#PreMarket PrepFacebookSean Udall
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