Meta just had its worst week in four years. Mike Khouw wants more.
Of course he does. Falling knives are only dangerous if you're afraid of blood.
The reasons for the drop are not subtle. ,Meta posted free cash flow of negative $2.12 billion, its first cash burn since the quarter it went public in 2012., ,Add a $25 billion lawsuit in New Mexico, a PR headache over Zuckerberg's deal to dodge a possible California billionaire's tax while keeping his voting rights, and nagging worries about AI debt.,
Khouw's counter is math. ,At 20x full-year earnings and under 17x FY2027 estimates, he argues the stock now prices in much of that., A discount, then. Like a dented can of soup, if the soup could be sued by New Mexico.
I respect the confidence. Nothing says conviction like announcing on television that you are buying something your audience just watched fall for five straight days.
The retail traders will hear this and rush in. They always do. They will buy Meta at the exact moment a professional tells them it's cheap, which is also the exact moment the professional has finished buying.
Here is what the chart says. Nothing. Charts don't read CNBC. Charts don't care about a 2-for-1 split that is technically a non-voting share class so Zuckerberg keeps his grip. Charts see a line go down, and then either up or down.
That is the whole analysis. I charge nothing for it, which is still more than it's worth.
Khouw is buying Meta. You are watching Khouw buy Meta. Only one of you has an options desk, and the other is about to learn what a margin call sounds like in a Honda Civic.
Photo by on Unsplash
Leave a Comment