Facebook Snags WhatsApp and Tesla Jumps After Hours

The Dow gave up nearly 100 points after the Fed's minutes came out, while investors digested news of Facebook's $19-billion acquisition of WhatsApp. Tesla shares also accelerated on earnings once again.

Feb 19, 2014 at 10:00PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Stocks traded even most of the day, but dipped late after the Federal Open Market Committee's minutes from its last meeting were released. As a result, the Dow Jones Industrial Average (DJINDICES:^DJI) finished down 90 points or 0.6%, while the S&P 500 dropped 0.7%. Investors, apparently, weren't happy with the Fed's plans to continuing tapering its monthly bond-buying program, barring any significant changes in the economy. According to the notes: "Several participants argued that, in the absence of appreciable change in economic outlook, there should be a clear presumption in favor of continuing to reduce the pace of purchases by a total of $10 billion at each FOMC meeting." Elsewhere, housing starts and building-permit numbers both disappointed the market, coming in at 888,000 and 937,000, but investors seem to attribute the drop to poor weather. Inflation indicators, meanwhile, showed only modest price increases in January. 

Facebook (NASDAQ:FB) was making waves after hours after it scooped up messaging service WhatsApp for the whopping sum of $19 billion. Facebook shares were down 2.7% on the news as investors may think that the social-network giant overpaid for the messaging app. The industry leader will pay $4 billion in cash, $12 billion in stock, and $3 billion in restricted shares that will vest over the four years for a service that counts over 450 million members, 70% of which use it everyday, and whose messaging volume is approaching the entire global SMS telecom volume. WhatsApp is also adding 1 million members every day. Facebook will leave the WhatsApp brand in tact and it will continue to operate it as a stand-alone application, and WhatsApp co-Founder Jan Koum will join Facebook's Board of Directors. The purchase is certainly a bold one for Facebook, but the company understands that its namesake site alone is not enough to dominate the future of social media. Just as it did with Instagram, the company is making a smart move but seizing another industry growth star. Observers can argue about the price tag, but this is the right strategy for Facebook.

In earnings news, Tesla Motors (NASDAQ:TSLA) soared past estimates in its earnings report once again as shares jumped 13% after hours. The electric-car maker posted a per-share profit of $0.33, ahead of estimates at $0.21, while revenue skyrocketed 148.5% to $761.3 million, much better than the consensus at $673.1 million. Even better, the company lifted its 2014 guidance, saying it expects to sell 35,000 Model S Sedans this year, ahead of previous projections at 29,000, which would give it a 55% increase over last year's total.  The company also plans to step up its production from 600 to 1,000 cars a week. Tesla shares have a sky-high price tag at a forward P/E of 121 and a market cap near half of General Motors, but shares should keep moving higher as long as the company continues to beat estimates and lift its guidance.

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Jeremy Bowman owns shares of General Motors. The Motley Fool recommends Facebook, General Motors, and Tesla Motors and owns shares of Facebook and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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