Facebook is one step away from the biggest failure in the histor

Looking at the Facebook share price chart (see the figure above), there are literally no signs of an approaching disaster: the price at record highs and the annual growth rate approached 25%. But trouble is already knocking on the door. Yesterday after the market close, the company unveiled quarterly results. And we can’t say that they were very much a failure. Revenue rose 42% to $ 13.2 billion (although analysts had expected $ 13.3, but the deviation is quite insignificant within the margin of error). The number of active users was 1.47 billion (analysts' expectations of 1.48 billion), which is 11% more than a year ago. Net income per share even exceeded forecasts of analysts $ 1.74 (analysts' expectations of $ 1.71).

But investors reacted very painfully to the comments of David Wehner, the chief financial officer, that the company's revenue growth will continue to slow. He noted that the rate of revenue growth will soon become a single-digit number from a two-digit number.

After that during the after-hours trading shares of the company collapsed by 24% (!). This is the largest one-day drop in the history of the US stock market in USD terms. The company lost over $ 150 billion (!) in several hours. What makes Facebook an absolute champion. Recall that before that, Intel was ranked first (the amount of one-day losses was $ 91 billion), followed by Microsoft ($ 77 billion), Apple ($ 60 billion) and Exxon Moblie ($ 52 billion).


Despite a quite depressing picture, we consider such a development of events a classic market overreaction, when investors and traders greatly overestimate the significance of an event and the price deviates significantly from the fundamental value. This leads to the appearance of temporary inefficiency in the stock market, that is, opportunities for earning. The fact is that anomalies (and in this case it is a classic case of a market anomaly) tend not to last long and the markets return to their equilibrium state.

Therefore, we recommend taking advantage of the unique opportunity that arises extremely rarely and earn by trading on Facebook promotions. According to the OverReaction Hypothesis, deviation from the equilibrium price in the form of overreaction disappears with time and occurs in the form of the contrary movement. That is, after a sharp decline in shares, Facebook should grow in value. Therefore, we recommend today the purchase of Facebook shares for quick earnings. Once again, this is a unique opportunity, and such chances arise on the market very rarely.