Editor’s Note: Speaking of 200%, Mark’s last oil rec on XOM is up over 60% right now. “Oil is really hot still,” he told me last night. We’ve made out nicely with AK’s and Mark’s recent energy plays here in Trading Today, and you can probably expect to see more where those came from… |
Liz here, certified old person ™. (This is me using voice to text completely without punctuation or regard for human life.)
I am, predictably, on Facebook, as is my fiancé, another Old Person ™ . The other night we were in the movie theater and saw some young whippersnappers doing a Rockettes-style dance while facing the wall. On closer inspection, we saw a phone turned toward them, selfie-mode. “It’s The Tik-Tok,” we mumbled, shuffling away with our canes.
We’re both still reeling from Monday afternoon, when the 4-hour worldwide Facebook outage left us with nothing to do but crossword puzzles and macramé.
I’m sure Mark Zuckerberg – who lost $7 billion in personal wealth, the normal person’s equivalent of dropping his lunch money down the drain – was mildly inconvenienced as well. (We will refer to him hereafter as Bad Mark.)
Bad Mark has a lot of, probably well-deserved, problems this week. Facebook (NASDAQ: FB) cratered about 4% on Monday and erased about $40 billion from the company’s value, thanks to the double whammy of whistleblower testimony and what the tech people are calling a “backbone outage”.
Mark Sebastian (hereafter referred to as Good Mark) thinks that those woes will be short-lived, however…
“Give me a FB trade,” I said when I hopped on the phone with him earlier. “That’ll be hot right now.” (I may be old, but I can figure out what’s trending.)
“Go long,” Good Mark said immediately. “I’ve got a 3-to-1 trade for you.”
“That’s 200%,” I said, pulling out my calculator with the extra-large display.
Frances Haugen Won’t Really Make a Dent in FB’s Bottom Line
Frances, the whistleblower – a beautiful lady who appeared on 60 Minutes Sunday night, and then followed that up with bombshell testimony in Congress on Tuesday – really has it out for Bad Mark. While working for FB as an algorithmic product manager, she collected and stored reams of evidence that the company deliberately lets violence and misinformation spread, in the interest of dollars and clicks.
(I don’t care, FRANCES! I just want to see pictures of the grandkids.)
In the midst of Frances’s revelations (and totally unrelated to them, I am sure), Facebook’s entire infrastructure seemingly collapsed on Monday afternoon, along with Instagram and WhatsApp. (Who knows what those are.)
According to one of FB’s infrastructure people, during an of course totally routine maintenance job, “a command was issued with the intention to assess the availability of global backbone capacity, which unintentionally took down all the connections in our backbone network.”
Step on a crack, break your network’s back, apparently.
The resultant crater speaks for itself.
But if you notice, the ship’s already beginning to right itself. This is because – like all “headliners” plays — the actual needle hasn’t moved on the company’s underlying financials or business model.
FB’s historical net income rises and will continue to rise – not surprisingly for a company that, in Frances’s own words, “chooses profit over safety.”
And nothing about the analyst forecast for this $938B company (I can’t believe I even wrote a number that large) has changed either, with the median 12-month price estimate still up 27%.
In other words, this is a spectacular and messy pullback – but, according to Good Mark, a pullback nonetheless.
He thinks we’ll see a quick correction of course over the next couple of weeks, and what we’re seeing now is a buy point. Be nice now, children, why don’t you buy the little Zuckerberg boy his lunch.
How to Grab 200% as FB Crawls Back Up to $340
In many ways, this is a “flex” trade. Pretty simple, point and click for a quick reward. Not a lot of heavy methodology to understand – just an intuitive move on a tech giant. (Mark has a lot of incredible “depth” content based around his VIX strategies, which you can check out for free here.)
As you can see from our earlier chart (I’d put it here again, but I need my nephew to show me how to copy and paste), FB first broke $340 back in June and has since tested, revisited, and bounced off that level, getting as high as $382 before Frances gone and done what she done.
Mark’s take on the stock right now: “Go long – it’s worth getting long. FB will make a run back above $340 in the next couple of weeks.”
FB should announce earnings the last week of October (no hard date’s been given; this is projected from historical earnings dates) and the pre-earnings hype should help propel the stock back up to those $340 levels, too.
Mark’s Nickel Slots play is a bull call spread. Hedged for lower risk, but capped for slightly lower reward. However, it’s no slouch.
“It pays out almost 3-to-1 if FB can get back above $340,“ he said. Thank you, Good Mark, for living up to your name.
Here’s what to do:
NICKEL SLOTS
Action to Take: BUY-TO-OPEN the FB Oct. 22, 2021, $340 Call (FB211022C00340000) Pay no more than $4.00 (a net debit of $4.00 or less) for the spread. Enter as a Good-til-Canceled Order (GTC). |
As far as Dollar Slots, you could just pick up the $340-strike calls unhedged, but Mark doesn’t find that play as appealing. However, I thought I’d throw it in for all you young people who enjoy risky things like Ferris wheels.
(I’m telling you, those things are not safe. I know someone whose friend’s son fell out of one one time. I read something about it on Facebook.)
Here’s what to do:
DOLLAR SLOTS
Action to Take: BUY-TO-OPEN the FB Oct. 22, 2021, $340 Call (FB211022C00340000) at a limit price of $5.00 Enter as a Good-til-Canceled Order (GTC). |
In case all this didn’t make you feel old, I’ll leave you with a joke from Mr. 4. He sprung this one on me while I was driving in the middle of rush hour yesterday.
“Where does a grandma go when she has too many teeth?”
“Where,” I said perfunctorily.
“To the BEEF store!”
What?!
“Come on,” he said irritably, “it’s a JOKE!”
At this point, I feel like a lot of things are.
Liz