Metaverse

Metaverse is a huge opportunity that no investor should ignore. The potential Total Addressable Market (TAM) is over $1 trillion.

It is very early in the game. Think of eCommerce before Amazon () was a company.  Think of electric vehicles before Tesla () was a company.

 has set up a separate metaverse division called Facebook Reality Labs.   plans to spend $10 billion on metaverse this year.  FB plans to spend much more over the coming years.

Other prominent companies working on metaverse are , and .  There is also a metaverse ETF with the symbol .

By now, some of you are thinking, “What is metaverse?”  No worries, we are working on a detailed podcast on metaverse and opportunities for Arora Ambassador Club members.

 is likely to be one of the main beneficiaries of metaverse.

Earnings

Overall FB earnings were slightly worse than the consensus but significantly better than the whisper numbers.  Since the earnings were significantly better than the whisper numbers, in after-hours FB stock rallied to over $338.  If the stock had followed the typical pattern of most stocks since the pandemic low, the stock would have continued to rally.

Why Is The Stock Falling?

This morning the stock continues to fall.  The reason is that the momo crowd has turned against FB.  Apparently, the momo crowd did not like the company going on the offensive against the whistle-blower allegations.

As of this writing, the momo crowd is aggressively selling FB.

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There is no smart money selling.

Relative Valuation

In this expensive market, FB is the cheapest of large-cap tech stocks.

FB is growing at 35% per year and has extraordinarily high margins of 50%.

In the social media space,  trades at 23 times sales,  trades at eight times sales, and FB trades at five times sales.

Technical Picture

The short term technical picture has turned against FB due to aggressive momo crowd selling.

Wall Street

Wall Street is mostly coming to Facebook’s defense but targets are being cut.

Core Position

Most subscribers have very large gains on FB core position.  Consider continuing to hold.  There is no change in the very long term target zone at this time. Due to aggressive momo crowd selling and the negative technical picture, the long term buy zone is being temporarily suspended.

Trade Around Position

Partial quantity of the Trade Around position was exited earlier.  What to do now depends on individual preference.  From a fundamental perspective, it makes sense to hold the stock.  From a technical perspective, the stock should be sold.  Our algorithms that take many other factors into account are now neutral.

For tracking purposes, the plan is to continue to hold the Trade Around position and see if the selling pressure from the momo crowd eases. Also change the stops on one-half of the remaining position to $304.18 – $307.33.

The Trade Around Positions is separate and distinct from the long term core position.  Please see Trade Management Guidelines to learn about Trade Around Positions.

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