The stock market dropped on Friday as investors were unhappy with Fed’s tough stance against inflation. Fed Chair’s Jerome Powell expects the central bank to continue raising interest rates to fight back the rise in prices.
Overall, S&P 500 fell 3.4% to 4,058, while NASDAQ declined 3.9% to 12,142.
Meanwhile, Facebook (FB), I mean Meta, continues to see its fundamentals erode.
Tweet of the Day
Today Powell was clearly setting the expectation for a 75bp hike. He used words life "forcefully" and "until the job is done." After a general market run up into a down trending 200-day line, an aggressive Fed is likely a near term headwind.
— Mark Minervini (@markminervini) August 26, 2022
Chart of the Day
Our chart of the day is the one-year chart of FB as of August 13, 2022, when the stock was at $181.
The company’s fundamentals continue to fall, with -26% profit growth last qtr. Revenue growth was -1% year-over-year, but costs and expenses rose 22%. FB is blowing too much money on their Metaverse project that might turn out to be nothing better than a video game. It seems that Mark Zuckerberg is spending money like a drunken sailor at a crowded bar.
This stock is sick right now, and management is making mistakes. It recently broke up the 30-person team that was trying to build the operating system for the company’s Metaverse.
FB is on the radar for the Growth Portfolio. David Sharek’s Fair Value P/E remains at 20. The stock seems to be undervalued here.
