Facebook Inc. (FB), up 195 percent in two years and trading at a record last month, is starting to draw skeptics in the options market.
Shares of the world?s largest social network surged 43 percent in 2014, climbing to an all-time high on Dec. 22, after doubling in 2013. The gain last year was the eighth biggest among technology stocks in the Standard & Poor?s 500 Index.
Options betting on a decline in Facebook cost the most versus bullish contracts since July 2013, according to data compiled by Bloomberg. While the Internet company is a ?powerful platform? for advertisers to reach more than 1 billion people, it faces the challenge of demonstrating continued growth, Eurof Uppington of Lombard Odier Investment Managers says.
?We?re not banking on seeing Facebook repeat the same great performance it had in 2014,? said Uppington, a technology portfolio manager at Lombard Odier in Geneva. His company oversees $50 billion. ?It?s also seeing an increase in operating expenses. The company needs to invest in growth to overcome the law of large numbers.?
Operating expenses rose in the third quarter at the fastest pace since the first three months of 2013, data compiled by Bloomberg show. The Menlo Park, California-based company has purchased applications such as Instagram and WhatsApp Inc. to increase its appeal to younger users and drive mobile advertising sales.
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