FACEBOOK SHARES "STUCK IN THE MIDDLE WITH YOU" BETWEEN SUPPORT AND RESISTANCE

Facebook, Inc. shares

may have sent market observers a warning signal ahead of the most recent turbulence when they failed to set a new high back on March 5th even as the broader market was doing so. The company continues to execute to near perfection – but sometimes the weight of greatness can cause even the best companies' stocks to pause. How much further down can the stock fall during this "pause"? And, what is the upside potential for FB shareholders once the pause is finished? Let's take a look at all the numbers… What the bulls see in Facebook… • A P/E of just over 30 that appears to actually be justified when considering the company's estimated growth of revenues and earnings for the next year of 31.9% and 31.8% respectively. • Net profit margins of 23.58% that spin off over $3.95 billion in levered free cash flows annually. • A pristine balance sheet: o $11.20 billion in cash versus only $233 million in debt o A debt-to-equity ratio of only 0.65% o A current ratio of 9.6 What the bears see in Facebook… • Rich valuation metrics: o An market capitalization of $218.46 billion that trumps its estimated enterprise value of $207.5 billion o A price-to-sales ratio of 17.72 o A price-to-book ratio of 6.07 The technical take on FB shares… Technicians note that Facebook shares may have a bit more upside left in the most recent bull run, but that the short-term ceiling may only be 5% to 10% higher from current prices. The daily chart of Facebook gives technicians two potential resistance levels on which to focus. The first is the lowest possible projected resistance at $82.16 – a level which was already tested twice in the last six months. Above that level comes the highest (theoretically speaking) projected resistance level at $86.41. The nearest key support level for FB shares comes in at $73.45. It should be noted that FB shares have gone from an undeniable bull market (since mid-2013) to more of a neutral / sideways trajectory since making its top in late December of 2014. Overall… It appears that Facebook is neither a screaming "buy" nor a "sell" just yet. Those following the technicals for FB shares as a playbook will be buying near $73.45 and will likely be selling near either $82.16 or $86.41. Those using Facebook's growth trajectory as a guide will be buying at every turn until the company begins to disappoint with their results.