Facebook Running Out of Breath

 | Jul 31, 2013 | 10:47 AM EDT  | Comments
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Facebook (FB) and its management team deserve enormous credit.

Even when Wall Street counted them out, the company didn't quit. Even though the shift from personal computers to mobile was wrenching, and would have killed many well-positioned companies like it, Facebook found a way to make money.

I think Facebook shares are poised to go a lot higher than their initial public offering price in the next six months -- possibly to $50. But, in the short term, I think the next $3 move in the stock will be downward.

Last week's earnings report has sent the stock on a 44% run. That's huge. But shares must now pull back 10% in the short term. Shares are now at their offer price, and we are already seeing resistance at these levels.

So, if you've been in this stock for the past several months, you have to take some money off the table here. 

Mark Zuckerberg in particular deserves great accolades -- as do chief operating officer Sheryl Sandberg and Carolyn Everson, Vice President of Global Marketing Solutions. What they have achieved so far is an amazing feat. Mobile advertisements have resurrected this company.

Instagram is still growing like a weed, as well, and it has yet to be monetized. It would have been easy to try and tell Instagram co-founder Kevin Systrom how to run this business after Facebook bought it -- but Zuckerberg decided to take a back seat, and that's turned out to be a brilliant move so far. 

This Facebook rally does have legs, and it's bound to continue -- but it's likely to hit a pause for a few days at this juncture.

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