Facebook is showing the greater market first hand how much cheaper FB stock is right now compared to it’s true intrinsic value.
With Facebook launching a huge share buy back program allowing the company to buy back shares at what it believes to be a deep discounted price.
All the while encouraging other investors to start buying FB stock while it remains undervalued.
Others believe that this is simply a stunt being pulled by Facebook to produce more faith in the market towards it’s stocks.
And in actual fact the company is in trouble as it’s user base growth has slowed making this a fundamental problem to the company.
Yet more believe that the reason Facebook’s stock is down is no more than the fact that the company has received bad press this year.
After the press moves onto a new target as can be seen with it’s handling of Google, the share price will regain it’s lost value and recover.
This may be true, however it remains to be seen. This year Facebook stock has lost all of it’s value that it gained last year and is now in negative territory.
This could be a great time to buy in if the stock is about to go back and recover losses.
However it may also be the case that all of the FAANG stocks, as can be seen over last week, are going to lose substantially more value this year.
And while on many metrics facebook.com stock is showing a good buy at a discounted price compared to intrinsic value, it is also a risk considering the current volatility and downward motion of the stock.
What’s more if we do head into a global recession then buying into the tech company could lock up the investment for many years. Or sold at a potentially great loss.
In any case at current Facebook seems to consider their share undervalued and our repurchasing $9 billion dollars worth.
Is this enough to stop the drop in Facebook stock and cause a comeback? Or is this simply Facebook’s attempt to stabilize the stock yet ultimately the value will continue to drop?