Facebook’s historic sell-off this week has capsized the rest of the tech sector. Since Thursday, the FANG stocks – Facebook, Apple, Netflix, and Alphabet – have lost nearly $166 billion in market cap.
Even after that sell-off, the Wall Street darlings aren’t cheap enough for long-time tech investor Paul Meeks.
“I wouldn’t buy them today. I would buy them on a correction,” Meeks, chief investment officer at Sloy, Dahl, Holst, told CNBC’s “Trading Nation” on Friday. A correction marks a 10 percent pullback from 52-week highs. Such a drop would put Apple and Netflix at levels not seen since the beginning of May, and Alphabet back to its early July price.
“They will have a slip up at some point and these stocks won’t go down 2 percent, they’ll go down 20 percent because they’re volatile tech names and that’s your buying opportunity,” he added.
The possible exception is Facebook, which needs to offer up better incentive before Meeks feels comfortable buying the stock.
“I’ll get re-interested in Facebook under two scenarios: One, some clarity around the business model or two, the stock probably has to be $10 or $15 lower than where it’s currently trading to get me back in,” he said.
Meeks reduced his position in Facebook when it hit the high-$170s earlier in the week. He still has a small holding.
Facebook stock ended the week around $174, roughly 20 percent lower than the all-time high set on Wednesday. The following day, the social network lost $119 billion, a Wall Street record, after warning of increased expenses on security and privacy improvements.
While in wait of a bigger drop in the major U.S. tech names, Meeks suggests two other industry stocks that have solid long-term fundamentals but offer better value.
“I like some of the Chinese tech names, particularly the internet leaders like Alibaba and Tencent,” said Meeks. “In some cases you could say they have better growth potential than the American net leaders, and you’re buying them in just a total wipeout in their stock markets.”
The Shanghai Composite, China’s major stock market, is on the edge of a bear market after having fallen more than 19 percent from a 52-week high set in January. It is now down 13 percent for the year.
Alibaba and Tencent are due to report on their quarters in August, and Meeks says it’s best to wait to see their results before taking the leap.
Not a Scientific Survey. Results may not total 100% due to rounding.
Even after a big sell-off, the FANG stocks don’t look cheap enough for long-time tech investor Paul Meeks.
Some say the stock is a smart bet ahead of earnings even as Caterpillar’s performance – down 17 percent from its recent high hit in January – makes it the third worst-performing Dow stock in the last six months.
Trade war fears came for Ford and won. The automaker skidded into a bear market this month following escalating trade conflicts and disappointing earnings.
Facebook’s post-earnings bloodbath amounted to the biggest one-day loss of market value in U.S. stock market history. But some on Wall Street say shares of the social media network will recover.
Paul Meeks, chief investment officer at Sloy, Dahl Holst, discusses the Facebook rout and technology stocks with Eric Chemi.
Larry McDonald with the Bear Traps Report and Bill Baruch of Blue Line Futures discuss AMD and chip stocks with Eric Chemi.
FANG stocks are under pressure, but Paul Meeks of Sloy, Dahl, Holst needs to see a bigger sell-off before he builds on his position.
Trades to Watch
Gina Sanchez of Chantico Global says a North Korean attack, should one occur, isn’t likely to cause significant long-term market impact.
Boris Schlossberg of BK Asset Management says the ISM non-manufacturing report is key to watch ahead the jobs data released Friday.
Chad Morganlander of Washington Crossing Advisors is watching the dollar this week and expects it’ll begin to strengthen heading into the second half of the year.
Stacey Gilbert is the head of derivative strategy at Susquehanna.
Managing Director, ACG Analytics
Managing Director, Head of Technical Analysis, Evercore ISI
Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.
Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC’s “Squawk on the Street” (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.
In March 2018, Eisen was named co-anchor of CNBC’s “Power Lunch” (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.
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