Meta Under Pressure
Shares in tech giant Meta have come under heavy selling pressure ahead of the US open today as traders digest the group’s latest earnings report. Despite beating both earnings and revenues forecasts, investors reacted negatively to the details of Meta’s spending plans. On the numbers front, EPS came in a %6.03 vs $5.22 expected a 15% beat. Revenues were also seen higher at $40.6 billion vs $40.2 billion expected, just shy of a 15 beat. Both results represent a clear increase on the prior quarter and the same quarter a year earlier. However, it was the spending details which sabotaged what should have been a bullish reaction.
Expenses Increase
Meta detailed that it expects full year capital expenses in 2024 to rise to $38-$40 billion, up from the prior range of $37-$40 billion. Additionally, Meta noted that it expects a significant rise in capital expenditure in 2025 as the company expands its infrastructure and realises depreciation costs.
Spending Concerns
Elevated spending has been a major source of concern for Meta investors in recent years. With the company putting a huge focus on R&D for its growing AI business, there is a fear that this investment might not realise the returns that meta is looking for. The AI outlook has had several wobbles this year and if the sector does start to retreat in terms of popularity, Meta’s expenditure could leave it vulnerable to heavy losses.
Technical Views
Meta
The rally in Meta stock has stalled for now into the prior highs around 604.63, with the bull channel highs capping the move there too. While price holds within the bull channel above 542.28, focus is on a fresh push higher. However, if we break below there, risks are skewed towards a test of deeper support at 455.21 next.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.