FACEBOOK Stock 45% CRASH - Game Over for META?
Companies / Tech Stocks Apr 19, 2022 - 12:58 PM GMTBy: Nadeem_Walayat
The Facebook (META) stock price has CRASHED by over 45%! Far beyond anything anyone could have imagined the stock price could trade down to. So no wonder many investors are now too frightened to hit the BUY button given the epic collapse in the stock price fearing that it could be game over for this social media giant as it places it's bets on reinventing itself as a metaverse giant. So is it a case of game over and all those who bought ont he way down now destined to lose all in a dying stock despite the stock now trading on just 15X earnings?
NO WAIT The above is what happened in 2019! Less than THREE YEARS ago! Which had the same investors who missed the boat in 2019 prepared to FOMO into Facebook during 2021 typically north of $330 and in many cases right upto it's trading high of $386 all on the backs of only blue sky's ahead mania commentary purporting to be analysis that flooded the net, morons on youtube with huge followings buying into their slick or rather SICK presentations, though far worse was in store for the Cathy Wood cultists..
A case of DEJAVU! 2022
The 2019 Facebook bear ran for 5 months and saw a 45% price drop, the current bear has run is 5.5 months and seen a 46% price drop. EXTREME FOMO has now given way to EXTREME FEAR RIGHT AT THE VERY BOTTOM (probably)! When the dust settles I can easily see facebook trading back above $250, so I don;t expect it to stay down for long.
Savour what contemplating investing in stocks such as Facebook feels like right now! Make a diary entry, "Facebook was trading at $203 today, 46% below it's high but I was too scared to buy any" AND THIS is why most investors FAIL to buy GOOD stocks when they are CHEAP but instead FOMO into them when they are EXPENSIVE!
FACEBOOK RINSE AND REPEAT
All I am doing today is what I did during 2019 in Facebook and many other stocks such as Nvidia that experienced and even worse decline in it's stock price. Which is to BUY THE DEVIATON FROM THE HIGHS IN GOOD STOCKS! NOT ROCKET SCIENCE, the more they fell the more I bought just as I did this time round with Facebook that has seen my exposure mush rum to 127% of target! So why is is that I can do it without ANY FEAR whilst others are paralysed into inaction BY FEAR?
We'll what I keep getting asked on a near daily basis right now is have stocks bottomed, is this the bottom, where will the stock bottom, BOTTOM, BOOOTTTOOOM! BOTTOM!
I COULD NOT CARELESS WHERE THE BOTTOM WILL BE! ALL I CARE ABOUT IS THE DEVIATION FROM THE HIGH WHICH REDUCES THE STOCKS VALUATION FROM OVER VALUED TO UNDER VALUED.
UNDERSTAND THIS - The facebook stock price today is cheaper then when it was trading at it's lowest price in 2019! PAY ATTENTION TO WHAT THIS CHART IS SHOUTING! (blue line is FB PE ratio).
So once more, instead of trying to buy the bottom (which you will never do!) aim to accumulate the deviation from the high. Where the greater the deviation the greater the buying opportunity being presented in GOOD STOCKS! A MANTRA THAT I HAVE BEEN ITERATING ONLINE FOR A GOOD 13 YEARS NOW!
Here's what I concluded about Facebook back in 2019 when Facebook was trading at $166
1st April 2019 - Top 10 AI Stocks for Investing to Profit from the Machine Intelligence Mega-trend
"Facebook is definitely a AI machine mega-trend investing stock to hold as long as you are prepared to ride its roller coaster which on the plus side can from time to time generate buying opportunities as we witnessed during the past few months."
And as we are witnessing once more today!
As for me, I wont be staring in that rear view mirror wishing I had bought more Facebook stock when I had the chance to do so...
This article was an except for my recent analysis on continuing to capitalise on the downward spiral in stock prices in response to first Inflation Panic and now plus Ukraine War Panic. With the primary focus on identifying 5 small cap tech growth stocks to add to my High Risk stocks portfolio out of a short list of 50 stocks.
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FACEBOOK Stock 45% CRASH - Game Over for META?
FACEBOOK RINSE AND REPEAT
INVESTING LESSON - HAVE A PLAN AND THEN EXECUTE IT!
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1. XXXX - RANK 1 - $121.8, PE 7.8, EGF 38%
2. XXXX - RANK 1 - $58.5, PE 9.9, EGF 30%
3. XXXX- RANK 2 - $16.7, PE 8.7, EGF 33%
4. XXXX - RANK 2 - $89.5, PE 17.2, EGF 23%
5. XXXX - RANK 2 - $49.7 - PE 196, EGF 188%
That was first made available to patrons who support my work.So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $4 per month. https://www.patreon.com/Nadeem_Walayat.
Whilst my most recent just posted analysis is - UK House Prices Three Trend Forecast 2022 to 2025, where I pealed away every layer of the UK housing market I could think of to arrive at a high probability of trend forecast, no following of the consensus herd here!
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Your analyst BUYING the panic selling falling knives.
By Nadeem Walayat
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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.
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