Meta Platforms (META) shook the markets last week as the company released their quarterly earnings results.
The company beat on their earnings number but announced another round of huge investments into the further development of AI technologies for their products.
The company’s AI investments helped to bolster their advertising revenue over the last year, but investors are concerned that the company is preparing to return to the spending trends seen in 2021 and 2022, a move that stripped profitability from shares and tanked the stock by 80%.
With so many looking for an opportunity to “buy the dip” here, I thought a breakdown of the chart would help.
On a daily basis, we’re seeing signs that the market has not considered this as a long-term buying opportunity… yet.
Meta’s initial bounce from $415 to nearly $450 was met with immediate selling pressure as short-term traders were still looking to purge their shares.
Now, the stock appears ready to consolidate at $435 for the next few weeks as trading and option volume on the stock has dropped. That decline in activity suggests that investors are still in a “wait and see” mood.
Broader market weakness is still likely to apply pressure to Meta shares, breaking support at $425, then targeting $400, which is the first price level that we’re likely to see investors begin to aggressively add shares to their portfolios.
The analyst crowd has been incredibly quiet in the wake of last week’s earnings call.
Only one company has some out to defend the shares as Oppenheimer “reiterated” their strong buy recommendation while lowering their target price from $585 to $550.
The average target price of the 61 analysts covering the stock is $522, about 20% above current prices.
Bottom Line
Investors appear to be waiting for more inflation and the end of other large cap tech companies’ earnings report before buying the recent correction in Meta shares.
Look for shares to find technical support and an appetite from investors for the stock at $400.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.