Tumblin’ Tuesday – FAANG Failure Freaks Out Investors


Facebook (FB) is 40% off it's 52-week high ($215) and Netflix (NFLX) is not far behind and even our beloved Apple (AAPL) is down 20% as news spreads that Apple has slashed orders from their suppliers of about 1/3 of the 70M unit production schedule for the iPhone XR, XS, and XS Max models that were unveiled at the September event.  That, of course, is sending ripples throughout the tech sector as Apple's suppliers get hit hard but all tech manufactuers are now selling off in fear of some sort of sudden global slowdown because – if AAPL can't make sales – then who can?

I've been the outlier all year saying that NFLX and Amazon (AMZN) were better shorts than longs and we even made money in our Short-Term Portfolio with shorts on both of those stocks and the Nasdaq Ultra-Short (SQQQ) is the primary hedge in our portfolios but I certainly wasn't expecting Facebook (FB) to fall 40% but they have been plagued with scandal after scandal – that my Mom and her freinds know nothing about.  

Image result for facebook cartoon scandalsIn other words, I don't think many of Facebook's 3.6Bn users are going to delete their accounts over privacy issues, election hacking or whatever until there's a better place to share pictures of their puppies and children.  Likewise, my kids couldn't even contemplate life without Instagram and they have no idea its owned by Facebook and people in Europe aren't going to drop WhatsApp and start paying for their phone calls (much as the telcos who fund the political and media attacks would like them to).  

Unlike Amazon or Netflix, Facebook is a real company that makes real money – not projected future money to justify its current market cap.  FB, in fact, made $16Bn last year and they've made $15.25Bn in Qs 1,2&3 so far this year so call it $20Bn in 2018 and, at $130, the market cap of FB is down to $375Bn, so they are now trading at just 18.75 times their current earnings vs. 85x for AMZN and 100x for NFLX.  FB is being attacked for things that don't really have anything to do with whether or not they make money and it's…
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