Trading The Death Of MySpace (NWSA)

As we all know by now, MySpace is not long for this world, as News Corp.'s (NASDAQ: NWSA) $580 million investment has turned out to be one of the worst uses of money ever.

I think giving my dog $100 and watching him rip it up would've been a better use of money.

Facebook has already won the war on social networking with MySpace. There isn't any debate over this, as Facebook is growing by leaps and bounds

Since MySpace is close to either being sold to a private equity firm, or even closer to being put out of its misery, the trade here is to go long News Corp. If it's sold to private equity, then Rupert Murdoch and team will look like geniuses, as they've hoodwinked another buyer into thinking that MySpace is worth something. If he can get anywhere near the price he paid for it, he'll look like a bigger genius than Albert Einstein.

Chances are he won't recuperate his entire investment, and I have to think that the market is expecting that. Once the albatross that is MySpace is removed, shares will pop on removal of the uncertainty. We could see a couple of days worth of gains after the announcement is made, as investors breathe a sigh of relief.

CNBC reported that MySpace could be sold by the middle of the year, which could be a short term catalyst for the stock, as the process gets closer and closer to completion.

The trade for going long News Corp. on this news has already started, as MySpace recently cut half of its workforce, as it looks to prep itself up for a potential sale.

Whatever happens to MySpace, News Corp. will be happy to turn the page and move on. It was a smart idea at the time Rupert, but extenuating circumstances and the behemoth that is Facebook ruined it.

At least you still have the Simpsons.

Disclosure: no position in names mentioned