My Trading > My Trading Journal > August 5, 2012

My Trading Journal

August 5, 2012

4:14 am (PST)

In a previous journal post on July 8th, I posted a valuation on Facebook where I stated that the stock was overvalued. One of my main points was that the stock had a lot of potential downside because the estimated "revenue growth may be inaccurate because their revenue growth rate does not show deceleration" - and I thought this was a mistake by the market. I stated that I "wouldn't be surprised if they announced an earnings revision for 2013 later this year based on slower-than-expected growth".

Just this week, there was news out that Facebook's reveune estimates were revised downwards - and therefore, their revenue growth rate also. You can see the headlines below.



You can see below how the revenue growth rate now has a 4% point deceleration, whereas the previous revenue growth rate showed a 0% deceleration.



Since my previous journal post, you can see that the stock has decelined from 31 to 20, which is much closer to my value estimate of 19.



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