Meta stock is plunging down to its 2021 low on earnings. Here’s how to trade it from here.
Shares of Meta (MVRS) – Get Meta Report are getting hammered on the day, down about 25% on Thursday after reporting earnings.
The company missed on revenue expectations and investors weren’t happy with management’s outlook.
Investors were optimistic about Meta going into the report, particularly after strong showings from Apple (AAPL) – Get Apple Inc. Report and Alphabet (GOOGL) – Get Alphabet Inc. Class A Report (GOOG) – Get Alphabet Inc. Class C Report.
However, the results and ensuing price action have rapidly changed the tune on Wall Street.
Social media stocks like Snap (SNAP) – Get Snap, Inc. Class A Report and Pinterest (PINS) – Get Pinterest, Inc. Class A Report are getting demolished to the point where one might think they were the ones that reported the disappointing results.
Perhaps Meta’s explanation for its disappointing results has created fear in these stocks (both of which report after the close today).
As it pertains to Meta, the stock is trading down to its 2021 low. Will it go lower? Let’s look.
Trading Meta Stock
Weekly chart of Meta stock.
Chart courtesy of TrendSpider.com
Meta stock could not hold its 50-week moving average, but that observation dates back to the fourth quarter.
Earlier this week, shares were rejected by the 50-week moving average. While earnings could have gone either way, this was the second rejection in three weeks (on a weekly basis).
Once that measure failed to support the stock, then the $300 mark was in play. That level had gone from resistance in 2020 to support in 2021. In that sense, it was quite important.
With today’s plunge, it has me watching the 2021 low at $244.61.
Meta stock is trying to stabilize around this level, but it’s struggling to do so. It doesn’t help that the overall market remains under pressure today.
If today marks the low — and that’s a massive “if” — and if Meta stock can reclaim $250, then perhaps we can get a move back into the $270 area, where it finds the 23.6% retracement of the current range.
Above $275 will have bulls talking about last month’s low near $289.
On the downside, a move lower could have the 200-week and 50-month moving averages in play, along with the $225 level. The latter level was key just before and right after the Covid-19 selloff in March 2020.
In short: Above $245 is somewhat constructive. Below it is not.
