Meta stock is at multiyear lows after the social-media giant’s earnings report. The stock now has one level of support left to lean on.
Investors do not like what they’re hearing from Meta (META) – Get Meta Platforms Inc. Report, reflected in the shares cratering more than 20% on Thursday.
The move comes after the social-media giant reported earnings on Wednesday after the close.
Revenue rose 4% to $27.71 billion and beat analysts’ expectations, but earnings slumped almost 50% year over year and missed consensus estimates.
Further, management said it would meaningfully increase spending on its metaverse bet. It also guided for fourth-quarter revenue of $30 billion to $32.5 billion, the midpoint of which is below analysts’ expectations for $32.3 billion.
At a time where profit is at a premium, Meta is fine with sacrificing earnings in its chase to be the champion of the metaverse — a bet that isn’t even guaranteed to pay out.
The stock is paying the price, down 22% on the day and having now suffered a 74.6% decline.
Trading Meta Stock After Earnings Plunge
Monthly chart of Meta stock.
Chart courtesy of TrendSpider.com
As we zoom out with the monthly chart, one particular level stands out: the 78.6% retracement from the all-time high down to the all-time low.
After making a high up near $384, Meta stock has coughed up nearly three-quarters of its value — a difficult pill for long-term bulls to swallow.
Investors likely never thought they’d get a chance to see Meta back below $100, but here we are.
Note that the stock has even fallen below the covid low at $137.10. Additionally, it failed to hold the key $125 to $130 support zone.
I would view the 78.6% retracement as the make-or-break area. For now, it’s finding its footing just above that mark, with the $97.36 session low. Further, the $100 area is a pretty key zone from a psychological standpoint.
If the market comes under significant selling pressure, I don’t know that this area will hold. If it doesn’t and Meta trades lower, it will be in no man’s land. Even though it will be deeply oversold and have a low valuation, it has no defined support below $96.
On the upside, see how Meta stock handles $125 to $130, should it bounce that far. The bulls will want to see whether this area is reclaimed or if it rejects the stock.
