Lioness Associates, Inc.

Economic & Corporate Risk/Yield Reports

September 23, 2012 Facebook - 2012 Risk/Yield Update

Since the June write-up (below), Facebook valuation has decreased further which corresponds with the move into risk shown in the FB 2012 Delta Core/Transient graph.  Recently, there has been activity moving the stock up.  As the FB 2012 Delta Core/Transient graph depicts, core is likely to reach an equilibrium point in October which corresponds to the time that the USA economy is likely to be trending up.  

There is additional yield movement at the December 2012 timeframe but, this corresponds to a period where both the GLOBAL (see GLOBAL economy) and the USA economy (see USA economy) may be facing headwinds. 

From a positive perspective, there is less core risk in the September/October timeframe and this is likely to result in less downward pressure unless the whole market shifts down. 

Note that new versions of the graphs have been provided for this write-up as the algorithm for producing the graphs has been slightly modified.




June 20, 2012  -- Facebook Post-IPO Risk/Yield for 2012

Facebook has been stumbling along since May's IPO and fingers are being pointed back at both Nasdaq and Morgan Stanley for the disastrous results from the day of the IPO. The reasons for the failures will be determined both by public opinion and likely investigations (see article) that will look into the matter in more detail. 

From our perspective, the astrological configurations indicate that this company is likely to find itself in similar circumstances through it's "life". This is not a company that will die slow deaths - it will go out in fireworks - literally speaking.  This is not to say it does not have "lasting power", it does once it gets past the "growing pains".

As the FB Delta Core/Transient 2012 graph illustrates, the core (black line) stays primarily in the risk area of the graph during the summer. Movement into Yield does not occur until November 2012 and it is not possible to say how much it moves into Yield as that movement (if at all) is likely to occur next year.  The transient line stays primarily in Yield but, not very high indicating the public's continued interest in the stock but, maybe not enough to push prices higher.

The FB Risk/Yield 2012 graph does show a preponderance of Risk factors from mid-June to mid-September of 2012 but, also shows a dearth of both risk and yield Core factors in the October 2012 period.  

The recent acquisition is likely to cause some integration problems occurring in late summer and resolution of the matter may be delayed until October or so.  The October period might also see "security" issues come back to the forefront with a resulting wave of publicity. This might be similar to the privacy issues/control that Google experienced with expanding in China or it could be a simple lack of safeguarding private information of Facebook application users.

Also troubling is the slowing of sales growth for this company over the past few quarters (see article).  As of yet, there is no release date for "2012 Q2 earnings" reinforcing that the growth of this company while still likely positive long-term, may not be realized as quickly as investors would like.

Note, we covered his company back in March of this year before the IPO (link) and for those charts we used the "incorporation date" to generate the data points.  The data points used for the charts on this page are from the "Initial Public offering" date.

  FB Delta Core/Transient 2012 graph

        FB Risk/Yield 2012 graph

Disclosure as of 6/20/2012 - Facebook (FB) is not part of our portfolio at this time.