Henry Blodget: Big Money Buying Facebook?

Wednesday, 14 Nov 2012 | 6:04 PM ET

Facebook should have tumbled on Wednesday.

In the face of the stock's biggest lock-up expiration, shares should have taken a beating.

After all, a lock-up expiration allows selling among shareholders who were formerly forbidden from selling. And 804 million shares came into play.

However, by the close of trading shares of Facebook popped over 10%.


What gives?

According to Business Insider CEO Henry Blodget the price action suggests big money may be starting to buy. "I wouldn't be surprised if a big institution that wants a big position came in and bought," he explained on CNBC's Fast Money.

Fundamentals support the thesis, said Blodget. "They appear to be bottoming – mobile revenue has started to pick up."

Also, CEO Mark Zuckerberg has been talking about how making money is a priority - that's a big change from the kind of comments he had been making.

Is Facebook Pop a Buy Sign?
Despite the massive lock-up expiration which put 804 million shares into play, Facebook closed sharply higher on Wednesday. Business Insider CEO Henry Blodget explains why.

All told, there are good reasons for portfolio managers to establish new positions.

Of course that begs that question, if big money is going into Facebook, should you buy too?

If you're a retail investor probably not. Although big money managers may want or even need to own Facebook, individuals can probably make more money elsewhere.

"I think Facebook is in the middle of multi-year trading sideways compression process," said Blodget. "And it's valuation at 35 times earnings is rich. It's still hard to justify that price."

Posted by CNBC's Lee Brodie

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Trader disclosure: On November 14, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders; Scott Nations is long BAC; Scott Nations is long BAC CALLS; Scott Nations is long C; Scott Nations is long YHOO; Scott Nations is long SPY; Scott Nations is long S&P VOLATILITY; Tim Seymour is long AAPL; Tim Seymour is long BAC; Tim Seymour is long INTC; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Brian Kelly is long EWT; Brian Kelly is long SMH; Brian Kelly is long OIL; Brian Kelly is long EPV; Brian Kelly is long BRENTOILFUTURES; Brian Kelly is short EUROSTOXX FUTURES; Brian Kelly is short YEN; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long MSFT; Karen Finerman is long GOOG; Karen Finerman is long EBAY; Karen Finerman is long M; Karen Finerman is short JCP; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short SPY

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