If you’ve recently logged into your Facebook account, you may have noticed a number of targeted reels. No, it’s not TikTok. This just goes to show that Meta Platforms (META), Facebook’s parent company, is rolling up its sleeves and getting aggressive in the advertising space. META has lost some of its competitive advantage in advertising, especially with the rise of larger players like Amazon (AMZN) and Apple (AAPL) and other short film video platforms. But it still has a big player with a large user base.
META’s latest earnings report was pretty dismal, sending the stock gap down to levels not seen since 2016. The company also announced job cuts and a significant slowdown in advertising spending. And let’s not forget the huge — we’re talking tens of billions of dollars — investment in the metaverse that has yet to show any returns.
These factors didn’t sit well with META investors. However, since hitting a low of around $88 last November, the stock has been showing signs of recovery (see chart below). So far in 2023, the stock price is up around 13%. The past year has been tough for META, as it has for other large-cap growth stocks. So a recovery, even if it’s slight, can be an encouraging sign. The big question is, will the recovery last? If yes, it could help the other players in the same room.
CHART 1: IS META A PURCHASE? It may be too early to tell, but after being crushed so badly, it’s starting to show signs of recovery. Earnings are imminent, which will likely impact the stock’s price. Add it to your chart lists and watch patiently.Chart source: StockChartsACP. For illustration only.
What does META’s Chart have to offer?
- The 50 days moving average (MA) is sloping up and approaching the 100-day ma. When the 50-day MA crosses the 100-day MA, you get a gold cross, which is generally an indication of a bullish move.
- the Relative Strength Index (RSI) is approaching its overbought zone (upper sub-chart). Make sure it crosses over; If it holds these levels, it could mean that the rally could last, at least for some time.
- The relative performance of META versus the S&P 500 Index is hovering around the zero line. If the RS line (lower sub-chart) starts turning up and moving higher, it would be another indication of the stock’s strength.
META is expected to announce earnings on February 1, 2023. It will be interesting to hear if there is a mention of projected ad spend in the first quarter of 2023. Even the slightest sign of recovery should boost the share price .
It’s too early to tell if the stock is a buy, but it’s worth adding to your chart lists. The stock price could go either way, depending result report. As always, tread carefully and when you decide to add long META positions to your portfolio, think about how much risk you are willing to take and place your stops accordingly.
Jayanthi Gopalakrishnan
Director, Website Content
StockCharts.com
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation or without consulting a financial professional.
Happy charting!
Jayanthi Gopalakrishnan is Director of Site Content at StockCharts.com. She spends her time creating content strategies, providing content to educate traders and investors, and finding ways to make technical analysis fun. Jayanthi was Managing Editor at T3 Custom, a content marketing agency for financial brands. Prior to that, she was Managing Editor of the journal Technical Analysis of Stocks & Commodities for over 15 years.
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