Facebook stock didn’t hit rock bottom yet and could sink deeper

When something seems too good to be true, it usually is and those who jump to conclusions regarding Facebook stock will probably regret their decision. Nobody truly knows the true value of this stock and there are endless speculations about it, so basically choosing a short or long position is to some extent gambling. For the time being the hints point in one direction and we have good reasons to expect the stocks to continue their plunge in the foreseeable future.

By Martin K BinaryOptionsThatSuck.com Editor

Millions of shares dumped as the lockup expired

Facebook stock had more down days than up days since going public, but as the lockup expired, many investors chose to dump their shares. Almost 300,000,000 shares were unlocked on Thursday and this triggered a massive dumping, although it is uncertain how many of the 157 million shares that was sold were a part of the aforementioned unlocked shares. Many insiders are still holding onto their stocks, and speculations say that another 100 million shares would have the same fate in the next couple of days.

Despite the fact that some insiders will not join the stampede, investors are frightened by the rapid rate of share dumping. It is not the fact that insiders are selling their shares that worries investors, but the high number of people who are shorting their stocks at the same time. In the greater scheme of things, the dumping of stocks wouldn’t trigger a chain reaction, but Facebook stocks have been losing their worth constantly doing the last couple of weeks.

Investors will grow restless in the next few days

The direction of the stock price can move in either direction on short-term, because the investors’ mood will trigger this movement. This doesn’t have to be rational, and because they don’t have all the facts right not many will let instinct guide them instead of taking their time to analyze the cold facts. Facebook stocks have fallen below $20 per share before and the most pessimistic analysts suggest that they are not even close to their true worth.

Values as low as $12 per share are predicted before the company releases the next earnings report, but embracing this conclusion right away is not a wise idea. Instead of relying exclusively on what the insiders are doing right now, it is wiser to place the emphasis on the fundamentals. The former are trying to convert some equity to cash which means that those who don’t fancy the idea of gambling should stay away from Facebook stocks. The declining growth rate and the fact that the user base is slowly shrinking due to privacy issues or reliable substitutes, are good reasons for not touching these stocks.

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