Facebook soundly beats with its Q1.
Management and analysts barely acknowledged recent privacy concerns, or potential ramifications during the event.
Short-term short thesis now dangling by a technical thread.
To the surprise of few—including a bear like me—Facebook (FB) posted a hefty beat in its much anticipated Q1 financial results this evening. Perhaps to the surprise of perma-bulls in Facebook, however, FB’s positive reaction to its gonzo quarter still managed to get stymied by something as simple as its 200-day moving average.
Monitoring FB’s price action during its earnings conference call was very instructive. The stock immediately added a friendly 5% in after-hours trading before the conference call, based on the nice headline beat. And after management made it through their prepared remarks on the call without acknowledging any negatives stemming from the recent privacy scandal, FB charged up another 5%—testing how much the stock would go on sale at the important level represented by FB’s 50-day moving average.
So it was going to come down to the question-and-answer session to determine if analysts would ask the hard questions that could elicit even a minor mea culpa about the potential for impacts on future growth from Facebook’s business being viewed more as a publisher than a mere technology platform.
But the sell side kept it polite. Unnecessarily and disappointingly polite in my opinion. Nothing even close to a challenging question for the hosts was offered. And certainly nothing about the accusations that tens of thousands of other apps did the same thing as Cambridge Analytica.
As the question session neared its end, investors could sense management was off the hook for the night, and FB finally started to tick over $172. It flirted higher, but juuuust couldn’t manage a $173 handle. FB sleeps tonight at $171.32—nestled in the tiniest of nooks above its slightly weakening 50-day moving average, and below its flattening 200-day MA.
This short is absolutely in trouble. But bulls should still be just a tad concerned that FB didn’t punch right through this price level on the quarter’s headline numbers alone. The tick-by-tick price action tonight clearly showed that there was trepidation about what would happen in the conference call. And even though FB is now much cheaper on trailing earnings than it was in January, sellers and buyers were still evenly matched at the stock’s most basic level of technical resistance even though the conference call went as easily for Facebook as it could have.