The fall of Meta (Facebook)
Meta is one of those big tech companies that could potentially disappear in 5 years or so. Why? It's simple: in addition to the terrible report in February 2022, which essentially confirmed that Facebook had exhausted its growth, they began to burn money on the so-called "metaverse", which, in fact, no one needs. The only bright spot is their VR headset, but the competition is growing and they will also have to spend money on this as well. The next earnings report will be in about 2 weeks and I'm more than sure that it will be bad and the price may fall below $100 this year. If this happens and we don't return above 100/share, we can expect a further decline in the price to the levels of $40-50 (possibly by the beginning of 2024). The technical situation is also negative: a long-term uptrend has been broken, the nearest support is at the level of $100-120, a powerful downtrend on the weekly chart. I would not risk shorting the shares themselves, but it's quite possible to make money on the decline through options. I'll just buy puts for November-December and see what happens.
Note
wsj.com/articles/meta-metaverse-horizon-worlds-zuckerberg-facebook-internal-documents-11665778961It also confirms that the metaverse is essentially a waste of money and resources. So if Facebook don't change their priorities and just admit their mistake, then they will run out of money very quickly (especially in the current economic conditions).
Note
bought monthly puts, strike price $105. expecting further price decline before earnings report and massive selloff afterTrade closed: target reached
Congratulations to all who shorted/bought puts. I covered all my bought puts, but potentially the price could go to $80-90.Note
bloomberg.com/news/articles/2022-10-27/morgan-stanley-downgrades-meta-for-first-time-as-costs-soarWell, even $105 is a very optimistic scenario. The company spent a lot of money on something no one needs and plan to spend even more in 2023. This is beyond my understanding, but I will definitely re-open a short position if the price gets to $115-120.
Trade active
wsj.com/articles/metas-targeted-ad-model-faces-restrictions-in-europe-11670335772This is very negative news for FB. I mentioned earlier that I would be shorting around $115-120, but I needed confirmation. This is the confirmation I was waiting for. I didn't use options this time, so I just shorted the stock. The position was opened just before the close of the market, around $115 per share, TP $80, SL $128. Taking into account the further fall of QQQ/SPY and the complete absence of any positive news, it's still possible to short even at $110, since we will definitely not going up in the near future.
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