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September Penny Stocks To Watch

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Strong biotech activity drove penny stocks in August, lifting many to 2017 highs, according to Investopedia. Other low-priced stocks underperformed, held back by political dysfunction and late summer illiquidity that sidelined investment activity.

Half of August’s penny stock picks returned in September, all to higher spots on the list. RADA Electronic Industries, Ltd. led the pack, gaining more than 40% for a two-year high. 22nd Century Group Inc. jumped 23% during the period, while Trilogy Metals Inc. racked up and additional 17%.

Large scale catalysts could drive fresh speculation. The iShares Nasdaq Biotechnology ETF, for instance, began the last week of August in a strong position shortly after Gilead Sciences Inc. announced its acquisition of Kite Pharma, Inc. Such events impact low-price issues that are easier for small traders to purchase and hold versus large pharma manufacturers.

1. RADA Electronic Industries, Ltd. (RADA)

Source: Investopedia

RADA Electronic Industries, Ltd. (RADA), a defense electronics system of advanced electronic systems for airborne and land applications, moved from the number two spot in August to number one in September.

The stock fell into a multi-decade decline after it joined Nasdaq in the 1990s. It ground out a series of lower highs and lows through January 2016’s all-time 54-cent low.

The stock spent 16 months moving sideways in a narrow basing pattern before turning higher in May 2017 and rallying back to 2016 resistance at $1.78.

The stock cleared major resistance at $2.25 in July 2017, entering an uptrend that’s now filling the July 2015 gap between $2.50 and $3.60. Buying pressure remains strong, raising odds it will test 2015 resistance near $4.00.

Following capital raising activity with institutional investors, the company converted loans to equity and increased its net cash position by $13.3 million while reducing ongoing annual interest payments by approximately $250,000.

On Aug. 21, RADA completed a $10 million capital raise under an existing shelf prospectus, issuing 4,604,500 shares. The investors included leading Israeli institutional investors, such as Yelin-Lapidot Investment House, More Investment House, Noked Capital, and The Phoenix Insurance Company.

From Aug. 17 until Sept. 5, DBSI, the company’s primary shareholder, exercised warrants and converted a loan to equity. It sold a portion of the shares gained to institutional investors such as Optimus Fund and others. On a net basis over the period, DBSI increased its shareholding in RADA by 1,168,782 shares to approximately 12.2 million shares, representing 35% of the company’s equity on a fully diluted basis.

2. 22nd Century Group, Inc. (XXII)

Source: Investopedia

22nd Century Group, Inc. (XXII), a biotechnology company that provides tobacco harm reduction and development of proprietary hemp/cannabis strains, rose from the number three spot in August to number two in September.

The stock broke out above multi-year resistance near $1.50 in 2013, rallying to a record high a few months later at $6.36. It then began a persistent decline through August 2015 before finding support at 56 cents, followed by a bounce to $1.75.

The stock traded within these boundaries for 22 months, bouncing at support three times and reversing at resistance in equal measure. The price returned to that level a fourth time, improving odds for a breakout that could double the price in the year’s second half.

22nd Century Group found support near 70 cents in the second half of the year, testing that level three times ahead of a March 2017 uptick that has now reached range resistance. A breakout over $2.00 should draw strong buying interest favoring a high percentage rally back to its three-year high.

The stock hit its highest high since 2014 on Aug. 7, 2017, and pulled back to the 20-day SMA, testing support around $2.00. This price level could offer a platform for continued upside that reaches longer-term resistance near $4.00.

The stock joined the Russell Microcap Index three months ago when FTSE Russell reconstituted its U.S. and global equity indexes.

Membership in the Russell Microcap Index signifies automatic inclusion in the value style indexes. FTSE Russell determines membership for its Russell indexes primarily by objective, market-capitalization rankings and style attributes.

22nd Century Group focuses on genetic engineering and plant breeding that allows the increase or decrease of nicotine levels in tobacco plants and cannabinoids levels in cannabis plants. Its primary goal for tobacco is to lessen the harm caused by smoking. The primary goal for cannabis is to develop proprietary hemp/cannabis strains for new medicines and agricultural crops.

3. Trilogy Metals, Inc. (TMQ)

Source: Investopedia

Trilogy Metals Inc., an exploration stage company which engages in the development and exploration of mineral properties, joined the list at number five in August and moved to the number three spot in September.

The Vancouver, Canada-based company went public on the U.S. exchanges in April 2012 at $3.20, beginning an immediate downtrend to an all-time low at 15 cents in January 2016. A recovery wave mounted the 200-day EMA at 60 cents that stalled three months later, yielding a narrow basing pattern into a July 2017 recovery that reached a two-year high at $1.22.

The rally hit a three-year high at $1.35 on Aug. 7, yielding a pullback that’s testing 50-day EMA support, with a bounce at or above 90 cents, setting the stage for a strong buying impulse.

The company reported a strong working capital position of $20.1 million in the second quarter, with cash on hand of $14.5 million.

For the three months ending May 31, 2017, the company reported a net loss of $2.4 million compared to a net loss of $1.6 million for the corresponding period in 2016. This variance was primarily due to the size of the field programs at the Upper Kobuk Mineral Projects in 2017 as well as the timing of the program. An increase of $840,000 of mineral property expenses occurred during the three months ended May 31, 2017 compared to the three months ended May 31, 2016. In 2017, the field program at Arctic and Bornite began with drilling by early June compared to 2016 where the field program kicked off in early July.

The company announced a financial partnership with South32 Limited for an option to form a 50/50 joint venture for a minimum investment of $150 million. South32 is required to fund a minimum of $10 million per year, for up to three years to keep the option in good standing. The first $10 million has been advanced to the company and will be spent on a 12,000-meter exploration drill program at the Bornite deposit, which is already under way.

4. Intrepid Potash, Inc. (IPI)

Source: Investopedia

Intrepid Potash, Inc., the only U.S. producer of muriate of potash, moved from the number nine spot in August to number four in September.

The company sold off to 2008 support at $13.80 in 2014. Two years later, the stock began a decline that reached an all-time low at 65 cents in March 2016. The stock rose above $1.50 in June before settling in a sideways pattern ahead of a December 2016 breakout that soon stalled at $3.04.

A stair step bounce reached a 21-month high at $3.93 on Aug. 3, giving way to rectangular consolidation with support near $3.15. The stock is now testing range resistance, with a breakout to more upside that could reach the 200-week EMA, now descending from $8.00.

Intrepid generated a second quarter net loss of $5.9 million, or $0.05 per share, delivering a first-half net loss of $19.6 million, or $0.19 per share. This marked an improvement over the net losses of $13.4 million, or $0.18 per share, and $31.8 million or $0.42 per share, in the second quarter and the first half of 2016, respectively.

Improvements in year-over-year net loss per share were driven in part by a gain in outstanding shares from the March 2017 secondary offering.

Consolidated gross margin advanced to $3.7 million and $0.8 million in the second quarter and the first half of 2017, respectively, against the prior year. Improvements were due to lower cost solar potash production and higher average net realized potash pricing that offset lower average net realized sales prices for the product, Trio.

Cash provided by operating activities rose year-over-year to $9.7 million and $11.5 million for the second quarter and the first half of 2017, respectively. Increased cash flow was due to strong spring demand, increased potash prices, and the elimination of costlier conventionally mined potash from the production profile.

5. Tantech Holdings, Ltd. (TANH)

Source: Investopedia

Tantech Holdings, Ltd., a manufacturer of bamboo-based charcoal products for industrial energy applications and household cooking, heating, purification, agricultural and cleaning uses, moved from the number 10 spot in August to the number five spot in September.

The company went public at $6.00 in March 2015 and began an uptrend that topped out at $33.97 five months later. In the next three months, the stock relinquished more than 90% of its value. Bears maintained control into the April 2017 all-time low at $1, followed by a recovery that reached a 10-month high in July.

Pricing has tested resistance at the September 2016 breakdown through the October 2015 low, with a buying surge setting the stage for upside into the $6 range.

The stock hit an all-time low at $1.00 in April 2017. Bullish action since that time has reached 2016 resistance, with a breakout raising odds for a rally into the 2016 high at $6.00.

6. Cancer Genetics, Inc. (CGIX)

Source: Cancer Genetics

Cancer Genetics, Inc. (CGIX), a provider of personalized medicine, offers diagnostic products and services that enable precision medicine in the field of oncology.

The stock topped out at $23.25 in 2013 and ground sideways into a 2014 breakdown that accelerated into the second half of 2016. The stock dropped to an all-time low at $1.10, then turned higher in 2017, lifting above the 200-day EMA and reaching a 17-month high at $5.30 in March.

Price action since March has carved a long series of lower highs, generating a trendline with resistance at $3.90. A rally above the 2017 high would set the stage for rapid gains that could eventually reach double digits.

The company reported second quarter revenue of $6.6 million, with record biopharma demand with $7.1 million in new contract bookings for its biopharma services.

Clinical services revenue was up 20% in the quarter to $3 million over the same quarter in 2016. The company reduced its second quarter loss from operations by 22% compared to 2016.

The company is now supporting more than 170 clinical trials serving nine of the top 10 biopharma companies in the world.

7. Moleculin Biotech, Inc. (MBRX)

Source: Investopedia

Moleculin Biotech, Inc. (MBRX) went public in June 2016 at $8.99 and began a downtrend that continued to post new lows into May 2017 before it bottomed out at 71 cents. A June test held support ahead of an uptrend that completed a high volume base breakout which saw the stock rally to an 8-month high at $3.75 by the month’s end.

A pullback in July found support at the 50-day EMA, causing a bounce to range resistance, followed by a decline that could attract strong buying and continued upside toward $6.00.

The company recorded a net loss of $3.3 million in the second quarter of 2017 for the change in fair value on revaluation of its warrant liability associated with warrants issued in conjunction with its stock offering in February 2017.

The company recorded a gain in the second quarter of 2017 of $1.2 million related to the expiration of warrants issued as part of the February 2017 stock offering.

The net loss for the three months ended June 30, 2017 was $2.3 million, including non-cash income of $1.2 million related to a gain recognized on the expiration of warrants, which was offset by a non-cash expense of approximately $3.3 million on the change in fair value of the company’s warrant liability. The net loss also included additional noncash charges for $0.1 million for stock-based compensation and other stock-based expenses.

As of June 30, 2017, the company had $9.3 million in cash and cash equivalents compared to $5.0 million at Dec. 31, 2016. Through June 30, 2017, $3.2 million in cash was received from the exercise of warrants issued in the February public offering. Cash used in operations was $3.4 million for the period ending June 30, 2017.

8. Vivint Solar, Inc. (VSLR)

Source: Investopedia

Vivint Solar, Inc. (VSLR), which provides homeowners with simple and affordable clean energy, opened for trading in October 2014 at $17.01, ahead of a severe downtrend that bottomed out near $7.50 in December 2014. Lower lows in the second quarter of 2016 gave way to a basing pattern, followed by a June 2017 breakout that’s now testing 50-day EMA support. A bounce at this level could gain traction, testing the 2017 high ahead of additional gains into the $7.75 to $8.00 resistance zone.

Operating leases and incentives revenue was $43.4 million for the second quarter, up 45% from $30 million in the second quarter of the prior year. Total revenue for the quarter was $73 million, up 109% from $34.9 million in the same quarter of the prior year.

Cost of operating leases and incentives was $33.8 million for the quarter, down from $38.5 million in the same period of 2016.

Total operating expenses, including the cost of revenue, were $87.3 million, compared to $71.4 million in the same quarter of 2016.

Loss from operations was $14.3 million compared to $36.5 million in the same period of 2016.

As of June 30, 2017, Vivant Solar had $15 million in undrawn capacity in the working capital facility, and $308 million in undrawn capacity in the aggregation facility. The company also had approximately 109 MWs of installation capacity remaining in its tax equity funds.

9. China Information Technology Inc. (CNIT)

Source: Investopedia

China Information Technology Inc. (CNIT), a provider of Internet-based ad distribution and ad display terminal sharing systems in China, topped out at $16 in 2009 and broke down two years later, beginning a decline that continued into the 2012 low at 71 cents. A three-year bounce ended in a triple top reversal near $7.00 that gave way to November 2015 and March 2017 tests at the deep low.

Support held after a final washout, resulting in a two-legged recovery that has reached a 52-week high. Buying volume indicates the current pullback to 98 cents will mark an opportunity ahead of a rally that could reach the 200-week EMA over $2.00.

The company recently entered into a contract for the sale of 3,000 CNIT cloud-based ad terminals to be installed in office buildings, residential communities, shopping malls and outdoor locations throughout Tianjin Municipality, the primary industrial, commercial and economic center of North China.

The company has projected 2018 revenue of $30 million to $33 million and adjusted net income of $9 million to $11 million, with sales of 120,000 cloud-based ad terminals in 100 cities covering 200 million people throughout China.

10. Zynga, Inc. (ZNGA)

Source: Investopedia

Zynga, Inc., a company whose mission is to connect the world with games, became public in December of 2011. The FarmVille creator reached an all-time high at $15.91 in March 2012, then dropped in a straight line to $2.09 in November, ahead of a bounce that stalled near $6.00 in 2014.

The stock found support at the 2012 low in the first quarter of 2016, then turned higher, rallying to a three-year high in June 2017. Price action since then made a symmetrical triangle on top of the 200-week EMA.

The company achieved record mobile revenue and bookings in the second quarter, with revenue up 30% year-over-year and bookings up 33% year-over-year.

Mobile now represents 86% and 87% of total revenue and total bookings, respectively. Mobile online game revenue was up 39% year-over-year, and mobile user pay bookings were up 45% year-over-year. The company’s mobile audience reached 19 million average daily active users, up 28% year-over-year and the strongest since Q4 2014.

GAAP operating expenses for the quarter were 67% of revenue – down from 73% of revenue for the same period in Q2 2016, while non-GAAP operating expenses were 58% of bookings – down from 68% of bookings a year ago.

The company delivered its first quarter of GAAP pre-tax profit since Q4 2012, due in part to progress in improving operating leverage and the lowest quarter of stock-based compensation expense in more than three years.

The company generated operating cash flow of $37.8 million, which was its best quarterly performance in five years.

Penny stocks require investors to make some guesses about the future. Very few such stocks have a sufficient track record to indicate they will prosper. At the same time, the stocks on this list are in significant industries and have the potential to be vital players in their respective industries.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.9 stars on average, based on 8 rated postsLester Coleman is a veteran business journalist based in the United States. He has covered the payments industry for several years and is available for writing assignments.




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Analysis

NIO Means Tesla Monopoly Ends

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By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

On Sep 12, NIO made its IPO on the NYSE, which is a very important event for all automotive investors. Founded in 2014 by William Lee, NIO is one of the first companies to compete with Tesla in the premium electric car segment. NIO is based in Shanghai, China, and it already got investment support from such renowned companies as Baidu, Lenovo, Temasek, Tencent, Sequoia, and others.

There are currently over 4,000 employees at NIO.

In June 2018, the company started selling NIO ES8; currently, 481 electric cars have been sold and 17,000 more have been pre-ordered. This is Tesla Model X’s direct competition, while its price is twice as low thanks to some good support from the Chinese government, which is interested in promoting electric cars.

NIO ES8 starts from $67,000 (basic configuration). It has two engines of 635 horsepowers and can ride 355 km before charging. A good difference from Tesla is an option to use replaceable batteries; the monthly subscription is $193, and it takes just around 3 minutes to replace a battery. Tesla planned to offer this option, too, but did not implement it.

The underwriters of NIO at NYSE were BofA Merrill Lynch, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley, and UBS. The initial price per share was $6.26. During the first day, 160M of shares were sold, which allowed NIO to get around $1B and get a place in top US IPO’s rating in 2018.

During the first day, the share price increased to $7, while the next day it jumped above $13, allowing investors to make over 100% profit. This shows investors are very much interested in the company, perhaps because of the good pre-IPO promotion. Before buying NIO shares now, though, one should wait first for the volatility to calm down.

Comparing Tesla and NIO is not the best job now, as Tesla already has over 14-year experience; however, this comparison may well become valid in a year or two, when more data arrive. While NIO is just starting out, its management may make accidental mistakes.

The lockup period (the period during which investors are not allowed to sell their shares) is 180d, which may additionally support the price, while after that the Q2 results will come out. Among NIO’s advantages, one may name government support as one of the biggest. While the trade war between the US and China is here to stay, the demand is high, and company may cater to Chinese customers first. When it starts conquering the US market, though, the conflict may have already come to an end. The company also admits that the customs duties may indirectly influence the car prices.

The issues NIO might face are already known, and the most obvious one is that of meeting the demand. Over the first 6 months of 2018, NIO had a loss of $502M, while the profit earned afterwards is currently just $7M.

Another risk is in the news that Tesla has come to an agreement with Shanghai authorities to build a car factory in the city, which means high competition for NIO. Still, NIO is likely to win thanks to the price, as the parts for Tesla are produced in the US only, and they are subject to customs duties.

NIO management also announced they had had no mass electric car production experience before, and this may have negative influence on the company growth – an issue already overcome by Tesla. Finally, for ES8, there are around 1,700 used coming from 160 vendors; with so many suppliers, delays in shipments may become quite a common thing.

Many things depend on how NIO is going to rise its production volume and how true the declarations of the management are. Previously, we’ve seen how Elon Musk’s words were sometimes very different from what happened in fact.

One of the key topics here is financing, as the development will require a lot of money. Even Tesla has failed to book net profits so far, its losses and debts still growing.

NIO shares are likely to rise in the short term, as investors will be playing on the fact the company is quite promising at first sight. Other conclusions may be only made after there are at least some financial data at hand.

Technically, there are two support levels for NIO: one at $7 and another at $9.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 7 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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Analysis

TEVA: The Time Has Come

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By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

The bull market has made it harder to earn good profits on the share prices of industry leaders. Prices are already high, and the correction may begin at any moment. Day by day, the rumors about crisis spread , and such a crisis is usually expected in the Fall, which is confirmed with the latest 20-year history. Case in point: the dotcom crisis started in early September 2000, with the market reaching its bottom only two years later.

Another fall started in mid Sep 2007, and turned into the global crisis in Aug 2008. Still, the market reached its lowest low and started recovering sooner, in 2009. At the same time, some players are still living the past and waiting for the market to collapse everyday, without noticing the considerable gains that have been made over the years.

There were 7 years between the dotcom and the financial crises. The next major decline occurred in August 2015 but it was short lived and did not result in a major crisis. In 3 years more, Trump became the US president and started resolving the negative trade balance issue by imposing customs duties on China. This, together with tax reforms, supported the markets a lot, and they went on growing. However, the situation is rather tense now, and the fall coming alone may lead to the investors being rather worried. The companies hit their earnings historical highs every quarter, and this may make the management feel dizzy.

Still, there are companies that, unlike most of their counterparts, did not grow following the Trump election. One of them is Teva Pharmaceutical Industries Limited (NYSE: TEVA). When the market started growing after the US elections, TEVA started going down heavily, eventually losing over 80% during 2 years. The company started having problems in 2016 when they bought Allergan (NYSE: AGN) at $40.5B. Before that, TEVA capital had been growing steadily since 2006, while the debts had been at the minimum.

Once TEVA acquired Allergan, the debt went sharply higher, which provoked a selloff immediately. At the same time, the earnings also started falling.

Even the quarterly earnings in 2016 were not enough for investors, as the stock price first did not move much, and then hit the support at $50.00 in the middle of the year and went further down.

The outlook is disappointing, and one would never even think about trading this stock, but still there are some things one should consider well.

Many years ago, many people lived in the countryside or at least used to spend some time there, and few heard of such a thing as an allergy. Then, however, people start migrating to cities, which are very polluted. This, perhaps, led to allergies being quite widespread nowadays. Allergies can be quite dangerous, as in many cases it may provoke an allergic shock, with the patient literally hanging between life and death. In this case, the only thing they need is a medicine that will help them survive before the ambulance arrives.

This is exactly what Teva Pharmaceutical Industries Limited created EpiPen, a medicine that removes allergic shock caused by insect bites, food, other medicines, or physical activity. An injection of EpiPen is enough to stimulate the cardiovascular system and the respiration organs, which prevents the consequences of an allergic shock.

According to some sources, in the US, there are around 43M people who may suffer from allergic shock any minute and should have such a medicine at hand. Ideally, such a person has got to have 2 doses of EpiPen, as sometimes one may be not enough. These two doses cost around $375, while the competition are trying to create the same medicine using adrenaline that should make it much cheaper. Still, they are having problems with medical tests, which means EpiPen has no competition right now. Another point is that it should be used within 12 months; otherwise, you will have to buy another dose. This brings stable profits, the ethical aspect is taken away.

Teva Pharmaceutical Industries Limited is a multinational company with 66 plants in 60 countries. This is one of the biggest pharma companies out there, and it’s no wonder that Warren Buffett has paid attention to it. In Q2, Berkshire Hathaway increased its stake of TEVA shares to 4.3%, or 2,7M shares, and is now one of the top three shareholders.

Meanwhile, in November 2017, a new CEO came to TEVA. Kare Schultz reduced costs drastically, and, as a result, the debt stopped growing first, and then was reduced by over $10B.

Technically, the downtrend is finishing, and an uptrend may start in the midterm, with the support being located at $20.00.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 7 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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Stock Picks

Stock Pick: Facebook

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Facebook Incorporated (FB) is a social media giant that lets users connect with other users, post comments, share pictures, and share links to interesting web content. The firm began as a school-based social networking platform at Harvard in 2004. The company headquarters are located in Menlo Park, California with 30,275 employees and touts 1.47 billion daily active users.

Technical Analysis of Facebook Incorporated (FB)

FB started to show signs of weakness on July 26, 2018 when it gapped down and opened at 174.89. The open was 19.59% lower than the previous trading day’s close of 217.50. This plunge marked the worst one-day drop in history, wiping out $119 billion in FB’s value. Mark Zuckerberg’s nightmares did not stop there as FB continues to plummet as of this writing.

Nevertheless, it’s always a good idea to take a contrarian stance when stocks make extreme moves.

Technical analysis show that FB is still within the ascending channel even though it dropped by so much in recent weeks. In other words, FB is still in an uptrend. There’s no need to push the panic button as long as the stock continues to respect its uptrend line.

On the contrary, it’s actually a good idea to consider buying at the uptrend support. The stock has bounced off this trendline since 2013 so there’s a very good chance that FB will do the same this time around. The stock has suffered so much losses in such a short period of time so a drop at this level should inspire a bounce.

Fundamental Analysis of Facebook Incorporated (FB)

On top of the technical analysis, fundamentals offer some support to our bullish sentiment. FB’s trailing twelve months (TTM) price to earnings ratio (PE ratio) is 25.92. The stock appears fairly valued. However, it has a five-year maximum of 232.91. This tells us that investors are willing to pay a premium for FB shares.

In addition, Zacks reports that Facebook’s first quarter results beat expert estimates. Analysts forecasted that the company would generate revenues of $11.45 billion and a profit of $1.36 per share. However, Facebook posted revenues of $11.97 billion and an earnings per share of $1.69. Though, second quarter earnings did poorly, which is the main reason the stock dropped on July 26, 2018.

Most investors are probably aware of the privacy scandal that was brewing earlier this year. It seems that most of those negative news and worse than expected short-term earnings are already priced into Facebook’s stocks. This tells us that the worst is most likely behind us.

The strategy is to buy the dip as close to $164 support as possible. If bulls can successfully defend the uptrend support, then FB might be able to muster a rally to our target of $210.

The timeline for the target is less than six months.

Weekly FB Chart

Monthly FB Chart

As of this writing, the Facebook Incorporated stock (FB) is trading at 167.18.

Summary of Strategy

Buy: As close to 164 support as possible.

Target: 210

Stop: Close below 160.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.6 stars on average, based on 235 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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