Facebook is Not Competing with Google
- Posted by Greg Harmon
- on September 24th, 2012
I saw several mentions Monday evening saying something like the money leaving Facebook, $FB, stock Monday was flowing directly into Google, $GOOG. I am not sure how you could measure that but decided to look a a ratio chart of the two to see what it tells. The Candlesticks are the ratio of Facebook to Google, the orange area the chart of Facebook and the cyan area the Google chart, all since Facebook went public. What does it tell you? For me it shows clearly that premise is not true. First the chart for Google has been in a clear uptrend since shortly after the Facebook IPO
and before it started falling. Second the Ratio chart shows that the movement in Facebook stock is totally overwhelming the impact that Google has on the ratio. The Ratio is identical to the Facebook chart. I have seen this before (Look at lululemon athletica, $LULU against McDonalds, $MCD), it is not uncommon. Facebook truly is just killing itself.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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