The major indices are all trading higher at midday, with the Nasdaq and the S&P 500 already scoring new all-time highs for the third straight session. The Russell 2000 also hit a marginal new all-time high today, for the first time since March, and while the index turned lower as the session progressed, should it stage a successful breakout, the whole market could get a huge boost. Price action continues to be choppy ahead of tomorrow’s crucial Fed announcements that could shed light on the Central Bank’s exact “tapering” plans in the face of the growing inflation concerns. Tesla (TSLA) continues to be at the center of attention as the stock briefly plunged by more than 5% at the open following Elon Musk's comments regarding the firm’s agreement with car-rental giant Hertz about the lack of a finalized deal.
Stock Pick Summary:
With our portfolio going guns blazing and our TSLA profits crossing the 18,000% profit mark, we are ready to make our next move. Today, we add a well known social networking company that develops applications that enable people to connect through mobile devices, personal computers, and other devices. The firm’s products include Facebook, Instagram, Messenger, WhatsApp, and Oculus. Its revenue comes primarily from advertising. On October 25, it released mixed Q3 results. While earnings of $3.22 per share beat by $0.05, revenue of $29 billion missed estimates by $510 million. Monthly active users (MAU) and daily active users (DAU) which are key industry metrics, came in at 2.9 billion and 1.9 billion, respectively, relatively inline with estimates. It guided downwards and now expects Q4 revenue to be in the range of $31.5 billion to $34 billion, which was shy of the $34.8 billion analyst average consensus. It was however, the changes to Apple iOS that were the driving factor behind the miss.
As a consequence, the share price took a hit, which we now see as an opportunity for the long term. The shift of focus to building a metaverse could be an exciting long term prospect. “Metaverse” is often used to to describe a 3D virtual world which is inhabited by real people through avatars. The ‘metaverse’ is a set of virtual spaces where you can create and explore with other people who aren’t in the same physical space as you. Facebook has one of the largest user bases of any social media company in the world, and it is well positioned to bridge the gap between a concept that up until this point, has mainly been talked about in the crypto and NFT space.
We believe the metaverse opportunity could be as big as existing social media in terms of addressable users as the new social experience represents the next generation of internet after years of domination by mobile and PC. The metaverse vision is five-plus-year vision and one that will take considerable time. With its commitment to the Metaverse, a $10bn annual investment and a new name, there is a growing importance of non-Facebook apps like Instagram/WhatsApp, and may also help it with the negative FB brand perceptions. Patients investors could be rewarded in the long term!
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