Investing Update: Why I Sold Facebook
What I'm buying, selling & watching
This week the stock market was moving upward until a hotter than expected inflation number crashed the party. Inflation spiked up to 7.5%. That’s the biggest jump since 1982.
Here is where inflation has stood the last four years at the end of January.
2019 1.6%
2020 2.3%
2021 1.4%
2022 7.5%.
In addition to the inflation figure popping, the 10-year treasury yield has risen above 2% for the first time since mid 2019. The consumer sentiment survey from the University Michigan, showed a drastic drop of 8.2% from January. That is its worst level in a decade.
Controlling inflation and the proper moves by the Fed are becoming even more important to the markets. They’ll need to act as the shortage of supplies and workers, federal aid pumped into the economy, historical low interest rates and rise in consumer spending has caused the skyrocketing of inflation. Nothing signals that it will slow anytime soon.
Upward inflation has an impact on all aspects of the economy as well as consumers. We’ve seen price increases in anything and everything we buy. This proves why controlling it is important for both the consumer and companies. Consumers run the entire economy. As the consumer goes, so goes the economy.
A Question Answered
Many of you have asked for my thoughts on the changes at Peloton (PTON) this week. As everyone knows I love my Peloton. I was in the stock heavily during its run up and it did great for me, until I sold. But during the last few months I have watched like everyone else at the constant blunders made by the management team.
That finally changed this week. They replaced CEO John Foley with Barry McCarthy, formally the CFO at both Netflix and Spotify. They announced a slew of job cuts. Thankfully none of the instructors! The stock took off in reaction to these changes.
I’ve maintained my stance of being on the sidelines with this stock. Some of this current run up may be some short squeezing going on. I’ve got a price range I may jump back in with these changes to management. But I’d like to do some more work on what Barry’s plan is for the company. If anyone knows subscription based content it’s him. It sure doesn’t seem like they’re gearing up to sell to the highest bidder. It was reported that Amazon, Apple, Nike and Disney were looking at making a run at acquiring it. Time will tell if they can make the stock reflect the same love that the product has.
Moves I’ve Made
Facebook (FB) My time in Facebook was short lived. It hit my stop loss and sold out of my entire position. Had it not hit my stock loss, I would have went in and sold it myself.
The earnings call was a complete disaster.
Apple’s privacy changes have made a drastic impact on their user tracking.
Snap and Pinterest weathered the Apple changes better and both had the opposite reaction to their earnings and jumped higher compared to Facebook.
TikTok is becoming a major force. It’s the place where the younger users are.
Even with the high popularity of Facebook, Instagram, WhatsApp and Messenger their daily active users actually declined for the first time in its 18-year history.
They have problems in Europe with their privacy laws. Possibly ending in shutting off Facebook and Instagram there.
The rebranding to Meta and focusing on the Metaverse has me wondering if they’ve taken their eye off the ball and the core business. This investment is so many years off and they’re burning a lot of money at it.
In time Facebook could bounce back, but way too many questions arose after this quarter and I’m not sticking around to find out.
Nvidia (NVDA) I’ve added to my Nvidia position. The size of this position has slowly grown for me. It’s close to where I want it to be for the time being. It reports earnings on Wednesday.
Tesla (TSLA) I’ve added to my position. I’m still building out my position in Tesla. The more research I do on this company, the more I want to invest in it. Their push into AI (Artificial Intelligence) is what intrigues me, not so much the car business as I’ve talked about.
I came across a very interesting tweet today from Dave Lee, where Elon replied to him and it reinforces my view on Tesla.
What I’m Watching
Dutch Bros (BROS) We don’t have any Dutch Bros Coffee here in Wisconsin. But I’m starting to hear a lot about it. It’s expanding quickly with very small store footprints.
With being a newly listed company they have an IPO lockup period that expires March 14th. I wouldn’t look to buy until that is over as that allows insiders and early investors to sell. Plus it has had a big run-up in price. They are still a very small company with an under $3 billion market cap. When you keep hearing the phrase, “it’s the Chick-fil-A of coffee,” it kind of peaks your interest a bit.
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Disclaimer: This is not investment advice. You should not treat any opinion expressed as a specific inducement to make a particular purchase, investment or follow a particular strategy, but only as an expression of an opinion.