Meta Platforms (META) Stock Forecast: Three support levels to scoop up Facebook parent
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UNLOCK OFFER- Meta Platforms stock has broken through support at $173.
- Facebook has cancelled development of its smartwatch.
- META stock is trading down to $170 on Monday's premarket.
Meta Platforms (META), the parent of Facebook and Instagram, is seeing its shares tumble again in Monday's premarket after Friday marked the end of what many are calling a bear market rally. META stock dropped 4.6% to $175.57 on Friday and is now exchanging hands in the premarket for $170.12, down a further 3.1%. Three hours before markets open the Nasdaq futures have pulled back 2.7%, so Meta seems to be underperforming its major index once again as it did on Friday.
Also read: Nvidia Stock Deep Dive Analysis: NVDA price target at $205 with strong revenue growth
Many bargain bin, value investors are beginning to take notice of META's relatively cheap valuation. The stock has been too expensive for this cohort for nearly all of its existence as a public company. It sports a price/earnings ratio of 13.3 and trades for a PEG ratio (price-to-earnings/growth) of just 1. A combination of Meta's slowing user growth on its social media platforms and its heavy investing in metaverse technologies has made it less attractive to the market. Added to this is the trenchant inflation that is turning investors away from the equity market entirely. Institutions are looking askance at stocks and instead of turning toward bonds and cash.
Meta Platforms Stock News: The not-so-smart watch
Meta also faced some disconcerting news over the weekend as they decided to end the development of Milan, an internal code word for a smartwatch that was planned to be sold for $349 sometime next year. The smartwatch had cameras on both the front face and the back face of the watch, so users could take it off to snap photos. The problem is that the camera conflicted with the main goal of the watch – electromyography. This is the ability of the watch to sense finger and hand movements through electrical charges in the wrist, so as to allow the watch to be used in the metaverse. The watch would possibly allow users to pick things up or even throw items in the metaverse.
This is another instance of the metaverse crowding out profitable business ventures that shareholders have already grown annoyed at. Dropping Milan is part of CEO Mark Zuckerberg's strategy of cutting $3 billion in expenses that was announced in April. Meta has also opted to halt hiring on some new executives, while it deals with getting its spending under control. Heavy spending on the metaverse was one reason META stock fell so drastically in price at the most recent quarterly earnings call.
Meta Platforms Stock Forecast: Levels for entry
If you have read this far, you are probably interested in where to enter this play. We find support at $173 for META stock was already broken this morning, and now the nearest level is $169, the low from late April. This is followed by support at $160 and then $149. These levels seem like possible bottoms and have worked as support going back to 2018.
One interesting thing is that the weekly Relative Strength Index (RSI), which is showing a heavily oversold stock, has divergence with the share price chart between late February and late April. This often foretells a major reversal. The 5-week and 20-week exponential moving averages need to cross over in order to signal a reversal though, and currently, they appear too far away for that to seem likely. Our advice is to wait at least until META stock drops to $160. At this point and in this market, it seems like destiny.
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- Meta Platforms stock has broken through support at $173.
- Facebook has cancelled development of its smartwatch.
- META stock is trading down to $170 on Monday's premarket.
Meta Platforms (META), the parent of Facebook and Instagram, is seeing its shares tumble again in Monday's premarket after Friday marked the end of what many are calling a bear market rally. META stock dropped 4.6% to $175.57 on Friday and is now exchanging hands in the premarket for $170.12, down a further 3.1%. Three hours before markets open the Nasdaq futures have pulled back 2.7%, so Meta seems to be underperforming its major index once again as it did on Friday.
Also read: Nvidia Stock Deep Dive Analysis: NVDA price target at $205 with strong revenue growth
Many bargain bin, value investors are beginning to take notice of META's relatively cheap valuation. The stock has been too expensive for this cohort for nearly all of its existence as a public company. It sports a price/earnings ratio of 13.3 and trades for a PEG ratio (price-to-earnings/growth) of just 1. A combination of Meta's slowing user growth on its social media platforms and its heavy investing in metaverse technologies has made it less attractive to the market. Added to this is the trenchant inflation that is turning investors away from the equity market entirely. Institutions are looking askance at stocks and instead of turning toward bonds and cash.
Meta Platforms Stock News: The not-so-smart watch
Meta also faced some disconcerting news over the weekend as they decided to end the development of Milan, an internal code word for a smartwatch that was planned to be sold for $349 sometime next year. The smartwatch had cameras on both the front face and the back face of the watch, so users could take it off to snap photos. The problem is that the camera conflicted with the main goal of the watch – electromyography. This is the ability of the watch to sense finger and hand movements through electrical charges in the wrist, so as to allow the watch to be used in the metaverse. The watch would possibly allow users to pick things up or even throw items in the metaverse.
This is another instance of the metaverse crowding out profitable business ventures that shareholders have already grown annoyed at. Dropping Milan is part of CEO Mark Zuckerberg's strategy of cutting $3 billion in expenses that was announced in April. Meta has also opted to halt hiring on some new executives, while it deals with getting its spending under control. Heavy spending on the metaverse was one reason META stock fell so drastically in price at the most recent quarterly earnings call.
Meta Platforms Stock Forecast: Levels for entry
If you have read this far, you are probably interested in where to enter this play. We find support at $173 for META stock was already broken this morning, and now the nearest level is $169, the low from late April. This is followed by support at $160 and then $149. These levels seem like possible bottoms and have worked as support going back to 2018.
One interesting thing is that the weekly Relative Strength Index (RSI), which is showing a heavily oversold stock, has divergence with the share price chart between late February and late April. This often foretells a major reversal. The 5-week and 20-week exponential moving averages need to cross over in order to signal a reversal though, and currently, they appear too far away for that to seem likely. Our advice is to wait at least until META stock drops to $160. At this point and in this market, it seems like destiny.
Like this article? Help us with some feedback by answering this survey:
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