A love affair with Meta stock: Does Cramer owe the investment community an apology?

on Oct 28, 2022
  • Meta (formerly known as Facebook) stock plunged below $100 per share this week.
  • Shares haven't traded this low since 2016.
  • CNBC's Jim Cramer apologies for trusting management in turning around the stock.

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Many Meta Platforms Inc (NASDAQ: META) shareholders have seen their impressive gains wiped out after the social media turned meta company dropped a bombshell of a nasty report Wednesday afternoon.

Meta stock dipped below the $100 mark this week and is trading at levels not seen since 2016. Invezz already covered the earnings highlights here so let’s focus our attention on CNBC’s investment guru (celebrity?) Jim Cramer and his now famous apology to the investment community

Cramer didn’t like Facebook stock in 2021… until he didn’t

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When Facebook (not yet rebranded as Meta) was trading near the $400 level in September 2021, Cramer argued that investors need to be cautious – a fair and reasonable position at the time.

In early October 2021, Cramer said Meta Facebook and its management team need to “prove it still belongs” in the coveted FAANG club. He said investors need to be “more cautious” on the stock until management proves investors right or wrong.

Just a few days later, Cramer said he can’t “in good conscience own” the stock in reaction to the internal leaks where the company was aware of the harmful societal effects it creates.

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They say time heals all wounds. In Cramer’s case, he just needed less than a month to get over any heartache caused by Meta. What happened exactly to change his narrative? Your guess is as good as mine.

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On November 1, Cramer commented “you’ve got to own” Meta stock. On November 10, Meta was one of his top picks within the metaverse segment with shares still trading solidly above the $300 level.

Fast forward to February 2022 and Cramer is still a Meta stock supporter, stating he has “total faith” in Meta CEO Mark Zuckerberg. On March 25, Meta shareholders who opted to sell their position at around $220 will be proven “very wrong.”

When Meta’s stock continued its downward descent to the $150 level in the summer months, Cramer boldly claimed Meta’s metaverse (say that five times fast) is “so much better than Zoom.” You can read our full coverage of Cramer’s analysis in this Invezz report.

So when Meta’s stock collapsed in its reaction to this week’s earnings report, Cramer dominated stock market headlines with an apology. He said he “made a mistake” as he “trusted” the management team. Judge for yourself how genuine this is.

Why I wouldn’t accept Cramer’s apology

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I’m not a Meta shareholder so I have no financial interest either way. The reason why I didn’t buy Meta stock is because the warning signs were kinda obvious (look at the chart below), and it seems Cramer was among the few that were blind to see it. 

Clearly, sellers have been in complete control since the end of summer 2021

What exactly was the bull case for buying Meta stock from October 2021 through October 2022? It can’t be expectations for an explosion in user growth or average time spent on the platform. Did Cramer miss the part in Meta’s Q4 results where global daily users fell for the first-time ever?

Tik Tok’s momentum along with a boring and aging Facebook/Instagram platform was apparent to all. Facebook in particular has become the platform where my parents share pictures of their cruises and inpatiently wait for a ‘like’ from myself or my sister.

Worsening economic conditions puts into question the near-term sustainability of advertising growth. The long-awaited confirmation of monetizing WhatsApp is still to this day nowhere to be seen.

And Meta’s partnership with Qualcomm Inc (NASDAQ: QCOM) to develop customized virtual-reality chipsets? According to Dan Ives of Wedbush, this announcement “just shows kind of weak hands for Meta.”

Again, it’s worth repeating the question: what exactly was the bull case for Meta stock? I don’t know if there is an answer.

Lesson to learn: stop loving an unloved stock

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The only conclusion, at least in my opinion, is Cramer does what every flawed investor is known for doing: loving a stock that shouldn’t be loved. But Cramer, a former hedge fund manager and Goldman Sachs alumni, should know better and thrown in the towel months ago.

After all, the opening tagline on his ‘Mad Money’ show is: “Other people want to make friends, I just want to make you money, because my job is not just to entertain you, but to educate and teach you.”

Worst money maker, entertainer, educator, and teacher ever. Maybe he is a good friend, he owns a bar and who doesn’t want to be friends with the bar owner.

With an estimated net worth of $150 million (give or take), his apology for many is meaningless. He can afford the kind of losses suffered from his advice that the average investor can’t.

This response to a Tweet says it all:


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