TMTB Mid-day Wrap: Reddit, Applovin, META Weakness; TMT Momentum worst day in years; Netflix price increase?; memory/semicap/optical unwind

QQQs -2% with an ugly day finally in a double digit drawdown as yields continue to rise with the 10 year getting close to 4.5% as Oil is up another 5%. The weight of the war/macro finally coming to roost.

The environment continues to be a frustrating one for tech investors, who continue to run low gross waiting for the Iran turbulence to settle. In the meantime, the factor and sector whiplash continues - today it was semis underperforming software by 300bps+ and TMT Mo having one of its worst days in years (-8%) as favored sectors in semis — optical, seimcap, memory — all down close to double digits.

Today’s AMD/INTC action after strength yesterday was a not-so-gentle reminder (at least for us) that it’s not the right environment to be initiating trades where follow-through is expected — the CPU trade was nice while it lasted! Joking aside, this environment continues to favor strict risk/mgmt and quick trades. We’re under the 200d and the macro picture remains v muddied even when you take Iran out of the equation.

Getting this out before the close given the big moves today. Let’s get to the good(?) stuff…

INTERNET

• META -7% the big loser after the LA july vertdict holding META and GOOGL liable for designing addictive products that harmed a young user. Bloomberg had a pretty negative article saying the ruling threatens to expose the companies to thousands of similar product-liability lawsuits, potentially forcing fundamental changes to their platforms' features and advertising models. Bloomberg said the verdict, combined with a separate $375 million New Mexico ruling against Meta, signals a shift in legal liability away from content moderation immunity toward platform design practices, with additional major trials scheduled and state attorneys general pursuing cases in roughly 30 states. Hedgeye also had a pretty damning note saying the verdict sets a precedent for thousands of pending lawsuits, increasing the likelihood of massive global settlements and punitive damages. Ultimately, these ongoing legal battles are expected to drive significant changes in platform features, user engagement strategies, and federal safety legislation, according to HE. Also a note out flagging tougher 2H comps for META along with some skittishness around macro starting to impact ads (see below).

• Digital Ads: Beginning to hear rumblings in some ad checks about weakness in travel given what’s going in the Middle East. UBS had a check that flagged it and today edgew was out this mornin, saying they are beginning to hear first signs of macro pressure in March, just around Travel. No surprise here.

• RDDT -11% slammed, partly because the above two items. We also flagged significant weaker growth in March this morning. Here’s how web data looks like from SimilarWeb (I’m hearing mobile data isn’t much better either):