Hello! So, I’ve been looking around for long term swing plays and decided to focus on the tech sector because why not. My criteria was identify beaten down stocks, figure out why they got wrecked and see if there’s room to recover. I will keep these simple. I will also be updating this as I go.
Candidate 1 - FACEBOOK AKA META. I’ve been playing this for the past month and made some great money from the rebound back into the 180s.
Reasons for sell off:
- First time reporting a decline in users
- Threats of IOS changes impacting revenue. Please reference my guide to tech if you dont know what this is.
Reasons for potential rebound:
- Simply put, there is nobody that has the scale of FB. It was an eventuality that FB would hit market saturation, so the decline in user growth was bound to happen. You cant grow forever. While FB might take a hit, IG, What’s App and FB messenger are here to stay. There is no other product on the market
- IOS changes will impact revenue, but it’s market wide. I cannot stress how normalized advertising buying is. Sure, DR products might have taken a hit - but you’re still getting unparalled reach and scale from this platform. Advertisers arent leaving.
- VR / Metaverse. Obviously, this is an elephant in the room. But is a foudner lead company still, Zuck retains many voting shares and can subsequently shift his companies trajectory. There are not many social companies or tech companies in general that can do this still with a war chest the size of Facebooks. Amazon, Google, not founder lead anymore. Occulus is a loss leader right now, but its truthfully the number one VR product. The future of the metaverse is murky but theres opportunity there.
Conclusion:
FB has room to recover to 250 where its dramatic earnings fall happened. I dont think it will gap fill 250-300 over night, but I do think theres more than enough of a bullish case to make for FB to trend upwards over the next several months. The negative news is priced in, and the company is trying to pivot.
