Just before July 2018 ended, Facebook’s stock price plummeted by 20%; The company missed a couple of key consensus targets – unfortunately, this also dragged down other stocks, including Twitter, Alphabet among other names.
Since April 2018, when the co-founder of DoubleLine Capital LP, Jeffrey Gundlach, declared a short Facebook recommendation during the Sohn conference, which took place in New York. Since the announcement the social media giant had a total return of 31%; The, temporary, loss on Mr. Gundlach’s reccomendation was, partially, offset by his other recommendation of long oil and gas, which has returned approximately 10% in the same time frame. Investors can look atIEO– Ishares U.S. Oil and Gas Exploration & Production ETF or VDE – Vanguard Energy ETF.
Seems that Mr. Jeffrey Gundlach was right all along as his bets seem to be in great shape. Mr. Gundlach believes that, certain, equity bubbles are usually popped by regulation. Thus, he shorted Facebook among its other concerns, at this time.. Facebook used to be in good standing, even weathering the scandals with regard to data privacy.
Another ETF that we want to draw your attention to is XLC, which was launched in June 2018; This ETF is expected to go into a new sector of communications services, which included stocks from Facebook, Netflix, Alphabet, and Amazon. Even though 204 ETFs have more than 140 million Facebook shares, XLC is one of the ETFs that hold a higher percentage of Facebook out of its total holdings, sitting at, approximately, 20%. Otherwise,, XLC has 24% Class A and Class C shares of Alphabet, 5% common shares of Comcast and Disney, and 4% of of Netflix. This Facebook drama has led to an alpha scenario as XLC has been negatively affected by the plunge: it fell down by 4.1%.
Indeed, the odds are looking up for Gundlach.