Shares in Meta Platforms, the parent company of Facebook, surged more than 7% in extended trading on Wednesday after the social media giant’s second-quarter earnings and sales exceeded Wall Street’s estimates. This positive news has given investors confidence in Meta’s significant investment in artificial intelligence (AI) infrastructure.
Meta’s stock price has experienced significant fluctuations in recent quarters. In February, the shares jumped more than 20% on the back of strong Q4 results and the announcement of the company’s first-ever dividend. However, light second-quarter revenue guidance led to a drop of over 10% following Q1 earnings in April.
Analyzing Meta’s chart, it is evident that the stock has remained rangebound since the earnings-driven breakaway gap in February. The price has fluctuated above and below the 50-day moving average, indicating a lack of clear direction. Although the stock briefly reached an all-time high in July, it retraced to the lower portion of the range ahead of the quarterly results.
Investors should pay attention to two key price levels that the stock could test following the earnings announcement. The first level is around $490, near the 50-day moving average, where sellers may look to book profits. This level is marked by a horizontal line that connects several minor peaks and troughs formed during the rangebound period. While after-hours trading suggests an open above this level, it is important to monitor if the shares can hold above it through Thursday’s close.
If there is follow-through buying, the stock could retest $530. However, at this level, the price is likely to encounter significant overhead resistance based on the swing highs in April and July. Until the price decisively breaks out above these two peaks, there is a possibility of a double top formation.
In the event that Meta’s shares break out above the trading range, investors can use the measuring principle to project a potential price target. This principle involves calculating the distance between the range’s two trendlines in points and adding that amount to the top trendline. In this case, adding $110 to $530 forecasts a price target of $640.
Following the positive earnings report, Meta’s shares rose 7.2% to $508.87 in after-hours trading on Wednesday.
It is important to note that the comments, opinions, and analyses expressed in this article are for informational purposes only. Investors should conduct their own research and analysis before making any investment decisions.
In conclusion, Meta’s strong quarterly results have boosted investor confidence in the company’s AI investment. The stock has remained rangebound since February, but a post-earnings buying spree could test key overhead resistance levels. If the stock breaks out above the trading range, the measuring principle suggests a potential price target of $640. Investors should closely monitor Meta’s stock price and market developments to make informed investment decisions.
Disclaimer: The author of this article does not own any securities mentioned in the article. The information provided is for informational purposes only and should not be considered as investment advice.
