TSLA $1 Trillion, FB Earnings Apparently Good Enough

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Monday’s trading day was all about Tesla (TSLA) which rose 12.66% on 3x average volume, adding $130 billion in market cap on news that Hertz is going to buy 100,000 cars for $4.2 billion over the next 14 months. Obviously the logic doesn’t add up: a $4.2 billion order does not rationally equate to a $130 billion increase in the value of the business. If you think markets are rational, you’re the one whose crazy.

The next most important event yesterday was Facebook (FB) earnings after the close. I thought the quarter was mediocre at best as they added only 20 million Daily Active Users (DAUs), revenue was flat and operating margin declined from 42.5% to 35.9% compared with 2Q21. In addition, they expect total expenses of $91-$97 billion in 2022 compared with $70-$71 billion this year. That $23.5 billion increase in expenses equals exactly half of their operating income for the last 12 months!

However, the stock has been beaten up over the last 6 weeks or so and found support at the open Monday at its 200 DMA. The report seems to be good enough for the market as the stock is currently up 0.55% in the premarket (5:50am PST) – though it seems to be fading. Keep an eye on it today.

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