Real money, fake beach: Investor executes a Facebook trade in virtual reality

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Facebook has been beaten down in the past month, shedding 13%.

But, Inside Edge Capital Management founder Todd Gordon is so confident in Facebook’s rebound that he’s willing to put real money to work in a unique way — executing a trade on Facebook using the company’s Oculus virtual reality system.

First, though, he laid out why he still feels confident in the stock.

“I am disappointed with several of their manipulative practices, but longer term, I believe in the company, that through either regulation or natural market forces, it will right some of the wrongs,” said Gordon on CNBC’s “Trading Nation” on Thursday.

Facebook came under scrutiny most recently after whistleblower Frances Haugen testified before a Senate committee in early October, alleging the company put profit before the public good.

“Despite all these issues, Facebook’s stock has been a rock star. It’s up 750% since the IPO in 2012, versus the Nasdaq at 480%,” said Gordon.

Recent privacy issues notwithstanding, Gordon said the long-term growth for Facebook looks promising.

“I do strongly feel they’re well positioned in the social media space that — let’s face it — has changed human interactions forever, and specifically I like where they’re going with AI and the virtual reality space,” he said. “I’m very bullish on this, and the pandemic only accelerated the adoption of this technology. We were on a path towards this already.”

Pulling on his Oculus virtual reality goggles to make the trade, Gordon highlighted an area of support at $320 that should hold after the latest weakness — this aligns with its 200-day moving average.

Betting on an upside move after earnings scheduled for Oct. 25, Gordon is buying the 340 call and selling the 350 call with Oct. 29 expiration.

“That’s $290 of risk to potentially make $710 on that call spread,” he said.

Facebook traded Friday just above $324. It would need to rally 5% to reach Gordon’s lower end of the call spread range at $340.

Disclosure: Todd Gordon and Inside Edge Capital Management hold stock in Facebook.

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