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A Tale of Two Revolutions

More than two decades have passed, but folks who were there for the story I’m about to share with you still remember it as “The Revolution That Wasn’t.”

Let me share the tale with you and explain the lesson that it teaches.

Then we’ll show you a specific way to apply that lesson for a hefty profit.

First the story…

  • Nasdaq: FB

  • Facebook Stock Rises Despite These 852 Million Reasons to Fall It's difficult to think that an additional 852 million shares of Facebook stock hitting the market wouldn't weigh on the already struggling share price.

    That's why, for the third time in nearly as many months, Facebook Inc. (Nasdaq: FB) on Wednesday braced for what could have been the largest selling spree yet to hit the social networking giant.

    Scores of early investors and employees were at liberty to sell 778 million shares. Another 31 million in restricted stock, awarded to employees who joined the Menlo Park, CA-based company prior to 2011, were also unbound, along with 48 million shares held by former employees.

    The staggering number is almost equal to Facebook's existing 921 million share float, according to data from the company's most current filing with the U.S. Securities and Exchange Commission.

    But, a strange thing happened.

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  • How Facebook (Nasdaq: FB) is Sapping the U.S. Economy Facebook (Nasdaq: FB) is a drain on the U.S. economy.

    No, we're not talking about Facebook's IPO fiasco earlier this year and the subsequent stock price meltdown. It's bigger than that.

    Facebook is worst offender among the many Internet distractions keeping workers from getting things done in the office.

    Most workers stop what they are doing several times an hour to respond to messages from friends and co-workers on social media like Facebook and Twitter, browse the Internet, and check and respond to e-mail.

    And once distracted, it takes time for a worker to get back to the task at hand - one study put the average disruption at 23 minutes.

    All those interruptions add up to a massive expense for businesses and the U.S. economy.

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  • Execs Keep Selling Their Facebook Stock – Time to Worry? The market has been buzzing about the fact that three top executives of Facebook have taken their first opportunity to sell some of their stock in the social networking company.

    The sales were part of 230 million shares awarded to top executives and employees prior to the IPO that were subject to lockup until last week.

    According to Forbes, another 777 million shares awarded to Facebook employees will come off of lockup next week. It is expected that Facebook employees will continue to sell shares for the rest of the year.

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  • Why Facebook Stock Soared After Earnings Report Facebook stock (Nasdaq: FB) was up almost 10% in the first 30 minutes of after-hours trading today (Tuesday) after the release of its third-quarter earnings report, its second as a public company.

    Releasing earnings after market close, the social network leader posted earnings per share of 12 cents, on revenue of $1.26 billion, or 32% higher than the year-ago quarter.

    While Facebook did not provide an outlook following its uninspiring second quarter release, analysts were looking for 11 cents per share on revenue of $1.2 billion, according to data from Thomas Reuters.

    But this positive vibe doesn't mean Facebook's earnings problems are solved.

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  • Will a Poor Facebook Earnings Report Seal the Stock's Fate? The third-quarter Facebook earnings report will come out Oct. 23 after the markets close, and the results are looking increasingly dismal.

    Despite a recent milestone (one billion users), a new "want" button feature and a "pay-to-promote post" option, the company has failed to drum up investor and analyst fanfare.

    Wall Street shrugged off all of the recent news and Facebook (Nasdaq: FB) stock barely budged, except to move a little lower.

    Even CEO Mark Zuckerberg's mid-September interview, which appeared to put some spark back into Facebook's fading shares, now seems like a very distant memory.

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  • Is There Any Benefit to Facebook's New "Want" Button? Facebook Inc. (Nasdaq: FB) rolled out a business-friendly interactive tool for its massive user base on Monday with the launch of a "want" button.

    But, what Facebook will get from the "want" button is unclear.

    Still in the testing mode, the new feature allows Facebook members to create "wish lists" of desired items ranging from home furnishings to clothing to books to a bevy of other retail products. It's kind of like a Christmas list or bridal registry.

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  • Facebook Stock Won't be Saved by this "Useless" Idea Facebook Inc. (Nasdaq: FB) announced today (Thursday) it had finally amassed its one billionth member.

    While the company celebrated the landmark number, many analysts simply shrugged it off. So did Facebook stock, which was down about 0.4% by 2 p.m.

    As MarketWatch pointed out, "it's great to have one-seventh of the world's population in your network, but Facebook will have to translate that to the bottom line to sustain its upward momentum of late."

    Or, as Money Morning wrote a few weeks back, "Congrats on one billion Facebook users... who buy nothing."

    Facebook, in order to change that flaw, released a new plan this week to make money off its enormous subscriber base.

    But here's why Zuckerberg and team should go back to the drawing board.

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  • Why Facebook Stock Has Much Farther to Fall After Facebook Inc. (Nasdaq: FB) CEO Mark Zuckerberg addressed the public earlier this month to stem concerns over the stock's steep and steady fall, Facebook shares enjoyed a mild rally.

    That was fun for investors while it lasted.

    Facebook stock Monday renewed its descent, dropping 11% before stabilizing a bit to finish the day down 8.3% at $20.79.

    Monday's intraday decline was the steepest since July 27. It was so sharp it tripped Nasdaq's circuit breakers meant to shield investors from short-seller manipulation.

    Sparking this week's selloff was a fresh report from Barron's that said the company is overvalued. Renewed concerns over how quickly the social-networking behemoth can capitalize on revenue from the exploding number of users who access the site via mobile devices and tablets contributed to the drop.

    Tuesday morning, the selling continued.

    Before the recent selling spree, shares of the Menlo Park, CA-based company had given back some 45% since its hugely hyped initial public offering on May 18.

    But that decline isn't enough.

    Barron's gave Facebook a best-case scenario of $15 per share.

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  • While Facebook Struggles, These Rivals Steal Market Share As Facebook (Nasdaq: FB) continues to struggle with growth and mobile strategies, its rivals keep moving forward in both areas.

    GREE, Japan's $4.7 billion online media behemoth and rival to Facebook and its gaming counterpart Zynga Inc. (Nasdaq: ZNGA), moved further into Facebook's territory Monday with the purchase of social gaming company App Ant Studios.

    GREE already enjoys a prominent position in social media. It's quickly gaining on other social networks, namely Facebook, since the bulk of its users already access the site via mobile devices - an arena in which Facebook lags.

    With a strong focus on selling virtual goods, and with a variety of other superior services and mobile games, GREE is vying for sustained growth by expanding beyond its home turf -and is succeeding.

    "GREE strives to build the world's leading global mobile gaming ecosystem. The acquisition of App Ant Studio will help GREE reach its goal of having 1 billion users worldwide as it expands its robust portfolio of games on GREE Platform," a company statement read. GREE gushes the new Platform will deliver exclusive social gaming experiences, in addition to offering developers access to a rising and engaged worldwide audience.

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  • Facebook CEO Interview Sparks Stock Rally, But it Won't Last Facebook Inc. (Nasdaq: FB) CEO Mark Zuckerberg addressed the public and press yesterday (Tuesday) evening in his first interview since the social networking firm went public this spring, and he was a man on a mission.

    Zuckerberg aimed to show shareholders, analysts, employees and members that Facebook has not lost its swagger.

    Speaking at the TechCrunch conference in San Francisco, 28-year-old Zuckerberg, who has been harshly criticized for his lack of prowess as a CEO, appeared relaxed in his usual casual attire.

    While Zuckerberg's speech sparked some excitement and lit a fuel under Facebook's floundering stock, sending shares up 3% in extended trading Tuesday and another 6% by 1 p.m. Wednesday, the rally will be short-lived.

    "I certainly wouldn't buy this stock tomorrow," Simon Baker, founder of Baker Asset Management, told CNBC. "It's still an expensive stock-it trades at 30 times next year earnings. In fact, I'd sell the pop."

    When Facebook debuted on the Nasdaq May 18, it became the first U.S. company to go public with a value of more than $100 billion. Since the epic IPO, it has lost more than half of its capitalization as investors agonize about waning growth, employee defection, lack of presence in the mobile arena, fading traffic and Zuckerberg's capability at the helm.

    That's why CNBC's "Fast Money" regular and president of Metropolitan Capital Karen Finerman shared Baker's skepticism over Facebook stock.

    Regarding Zuckerberg's comments about the Facebook mobile strategy, Finerman said, "Unless you think Zuckerberg can monetize mobile and no one else can-I would prefer to be in a stock that trades at a lower valuation."

    Zuckerberg Shines Light on the Future of Facebook

    In the half hour interview, Zuckerberg touched on all areas of concern.

    Click here to see what Zuckerberg revealed...

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  • Facebook Stock Gains, But Rival Threatens Market Share Look out, Facebook: LinkedIn Corp. (NYSE: LNKD) is inching into your territory.

    As Facebook stock (Nasdaq: FB) keeps climbing from its all-time low last week of $17.55 a share, business-oriented networking site LinkedIn has introduced some new features that resemble those of Facebook.

    LinkedIn last week rolled out a new notification system and launched an update for its iPhone, iPad and Android apps. The updates now inform a member when someone likes or comments on one of their status updates - just like Facebook, the social networking leader.

    In the past LinkedIn only sent notifications if someone sent a member a message or extended an invitation to become a connection.

    In a statement, the company gushed, "You'll never miss a comment or update to an engaging discussion about a news article or trending topic on LinkedIn."

    LinkedIn's head of mobile products Joff Redfern said in an interview that the update will also let a member peruse company pages and job postings on smartphones and tablets. According to Redfern, users requested the feature so they could covertly browse for jobs while at work.

    The latest moves highlight how LinkedIn is morphing from a headhunting and career-networking site into something bigger. Facebook big.

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  • If Only Zuckerberg Chose a Catchier Facebook Ticker Symbol If only CEO Mark Zuckerberg had used a bit more imagination when cooking up the Facebook Inc. (Nasdaq: FB) ticker symbol, its stock might have fared a little better.

    Sound crazy? Maybe, but several studies have shown that clever, pronounceable stock symbols - think Yum! Brands Inc. (NYSE: YUM) and Southwest Airlines (NYSE: LUV) - do better in the market.

    The phenomenon is particularly true for IPOs, with the "fun name halo" extending about 10 days out from the stock's first day of trading.

    Companies that choose a ticker symbol that doesn't form a pronounceable word - yes, like Facebook (Nasdaq: FB) -- often struggle. Generally speaking, the more jumbled the letters, the worse a stock does.

    "[Our] research shows that people take mental shortcuts, even when it comes to their investments, when it would seem they would want to be most rational," Professor Daniel Oppenheimer, who co-authored a 2006 Princeton University study of the subject, told Psych Central.

    While the academics who have studied this have not conclusively nailed down the cause, most suspect it has to do with something called "fluency," or how easily a person can process information.

    People are simply drawn more to a catchy ticker symbol like YUM than a drab one like FB.

    "It is possible that [people] are initially more attracted to fluently named stocks, that they pay particular attention to those stocks, or even that they favor those stocks because they have developed an association between easily processed names and success," Adam Alter, Oppenheimer's research partner, told The Wall Street Journal.

    The Science Behind Clever Tickers

    Naturally, not every stock with a clever ticker symbol outperforms and not every stock with a subpar ticker symbol underperforms. But the broad data show a surprisingly strong relationship between a ticker and how well the stock does.

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  • What Drove Facebook (Nasdaq: FB) Shares to a New Low Since Facebook Inc.'s (Nasdaq: FB) debut as a public company at $38 a share on May 18, and the stock's peak at $45 on the same day, shares have tumbled nearly 50%.

    Facebook stock hit a fresh low yesterday (Tuesday), with shares reaching $17.55 before closing at $17.73.

    The slump came after a trio of brokerage firms slashed their price targets for Facebook shares. The firms cited the wave of expiring lockup periods that will flood the market with close to 1.7 billion shares over the next several months.

    The first lockup period expired Aug. 16, freeing a first batch of some 268 million shares. In mid-October, 192 million more shares will be let loose, and on Nov. 14 a whopping 1.2 billion shares will be free to sell.

    The total is more than four times the number of shares floating on exchanges before the lockup periods began expiring.

    "It's like a train coming around the corner toward shareholders, so they better get out of the way," Francis Gaskin, president of research firm IPOdesktop told the Los Angeles Times right before the end of the first lockup.

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  • Congrats on One Billion Facebook Users… Who Buy Nothing Facebook (Nasdaq: FB) is on the cusp of amassing one billion users, unarguably a milestone.

    The last official tally of Facebook users was 955 million. Employees have become giddy in expectation of reaching the one billion mark any day now.

    But, they might want to hold off tossing confetti, because the momentous occasion will also shine a bright light on the social network's shortcoming.

    No matter how many users Facebook acquires, if it can't sell anything, the landmark number is useless.

    As Owen Thomas of Business Insider wrote, "Bottom line: One billion users isn't cool. You know what's cool? Two billion."

    Facebook Sales Estimates Slashed

    The failure to monetize that many subscribers is a shame because Facebook's massive user base is an advertiser's dream if effective - but there have been no signs of future revenue growth.

    That's why market research firm EMarketer Inc. recently slashed its projections for the Menlo Park, CA-based company from $6.1 billion in annual sales to $5.04 billion. Facebook continues to struggle for advertising growth, in particular the fast growing mobile market.

    [ppopup id="70925"]That’s why Facebook stock should really be trading for this amount. [/ppopup]
    An increasing number of Facebook users are now accessing their accounts via smartphones and other mobile devices, an area where Facebook collects a great deal less in ad revenue than it does on desktop access.

    Facebook enjoyed an 88% revenue increase in 2011. EMarketer estimates Facebook revenue will rise only 36% this year and 31% in 2013.

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  • Why the End of the Facebook Lockup Period is a Big Deal (Nasdaq: FB) On Thursday morning, the first lockup period of some 1.91 billion shares of Facebook (Nasdaq: FB) ends, releasing even more of the battered stock into a market with few interested buyers.

    The end of the lockup period (used to reduce trading volatility immediately after an IPO) will kick off with up to 271 million shares flooding the market on the sell-side. More shares will become available over the next few months, compared with less than 500 million currently authorized for trading.

    Investors who got in early and paid a mere pittance for the stock may race to cash in despite Facebook's steady decline since its legendary May 18 initial public offering at $38 a share. Since the fabled IPO, which morphed into a trading fiasco, shares have lost some 40% of their value.

    The flood of shares ready to be unlocked is off-putting for some potential buyers.

    "It's one of the No. 1 issues on investor's minds right now," Herman Leung of Susquehanna International Group told Bloomberg News. "Even the investors that I talk to who want to buy the stock and like the company are not sure if they can stomach the lockups."

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