|

Wall Street Incites Mob To Pump Up Facebook

Facebook has rocketed 10 percent higher this evening in after-hours trading, demonstrating yet again how Wall Street runs a rigged game that even the most gifted carny operator would envy. The stock’s deft handlers have used a headline out after the close to incite flash-mob buying with the irresistible force of a nuclear detonation. Prior to this evening’s ballistic episode, which took all of 118 minutes to unfold, it had required an entire month to eke out the last 10 percent gain. That was no small trick either, since the news that kicked off the wafting rally was not particularly bullish. Facebook’s Big Idea, announced after the close on January 30, was to “pivot” away from advertising revenues toward fees for such services as encrypted messaging and virtual rooms to accommodate small groups.

At the time, the stock took an instant 15% leap, confirming our worst suspicions about investors when they come together as a mindless herd. Clearly, no conceivable business model will ever be more profitable than the one Facebook currently uses — i.e., collecting fees from vendors for laser-targeted advertisements. But if the planned “pivot” seems likely to diminish the value of each and every one of Facebook’s two billion subscribers, investors seem not to care.

Zuck Dazzles Analysts

Even without the change, Facebook was in danger of becoming uncool. The social media giant is already a pariah in the eyes of all who value privacy. Still worse is that its core audience of millennials has been deserting it in droves. We know from the saga of AOL that it’s possible for an internet giant to become a has-been overnight. Lest analysts pause to consider this possibility, Zuckerberg pro-actively dazzled them with twaddle about a “pivot” toward a new business model. It were as though McDonald’s had elicited high-fives from the Street by pivoting toward beer and pizza.

No matter, for the stock is screaming tonight on a short-covering panic triggered by earnings that beat analysts’ rigged, lowball estimates.  They provided a springboard for accomplishing in little more than an hour what a month’s worth of ratcheting rallies could not. Take mildly positive news, launch it after the close in the heat of a stock-market wilding binge, then let a short-covering stampede do the rest. In one spectacular, manifestly unearned leap, FB has closed half of last July’s bearish gap, bringing it within spitting distance of new record highs. Are these guys good, or what?

Author

Rick Ackerman

Rick Ackerman

Rick’s Picks

Barron’s once labeled Rick Ackerman an “intrepid trader” in a headline that alluded to his key role in solving a notorious pill-tampering case.

More from Rick Ackerman
Share:

Editor's Picks

EUR/USD looks offered below 1.1900

EUR/USD keeps its bearish tone unchanged ahead of the opening bell in Asia, returning to the sub-1.1900 region following a firmer tone in the US Dollar. Indeed, the pair reverses two consecutive daily gains amid steady caution ahead of Wednesday’s key US Nonfarm Payrolls release.
 

GBP/USD slips back to daily lows near 1.3640

GBP/USD drops to daily lows near 1.3640 as sellers push harder and the Greenback extends its rebound in the latter part of Tuesday’s session. Looking ahead, the combination of key US releases, including NFP and CPI, alongside important UK data, should keep the pound firmly in focus over the coming days.

Gold the battle of wills continues with bulls not ready to give up

Gold remains on the defensive and approaches the key $5,000 region per troy ounce on Tuesday, giving back part of its recent two day. The precious metal’s pullback unfolds against a firmer tone in the US Dollar, declining US Treasury yields and steady caution ahead of upcoming key US data releases.

Bitcoin's downtrend caused by ETF redemptions and AI rotation: Wintermute

Bitcoin's (BTC) fall from grace since the October 10 leverage flush has been spearheaded by sustained ETF outflows and a rotation into the AI narrative, according to Wintermute.

Dollar drops and stocks rally: The week of reckoning for US economic data

Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.

XRP holds $1.40 amid ETF inflows and stable derivatives market

Ripple trades under pressure, with immediate support at $1.40 holding at the time of writing on Tuesday. A recovery attempt from last week’s sell-off to $1.12 stalled at $1.54 on Friday, leading to limited price action between the current support and the resistance.