Meta Stock, IBD Stock of the Day, in Buy Zone Even as Mag-7 Shares Stagnate

Meta-platforms

Meta-platforms

META

$2.25



0.4%



52%

IBD Stock Analysis

• Share above 542.81 buy point
• META at 3-week intervals with 544.23 as alternative entry

Composite rating

Industry group ranking

New pattern

Consolidation

* No real-time data. All data shown was collected on 09/20/2024 at 10:57 am EDT.

S&P 500 giant Meta-platforms (META) is the IBD Stock of the Day on Friday as the Facebook parent company dipped slightly during trading but has been in a buy zone since an official entry amid Meta's nearly 60% rally this year.

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The parent company of Facebook and Instagram exceeded estimates for the second quarter at the end of July with a 73% increase in profits and a 22% increase in revenue. Growth in advertising revenue also exceeded forecasts.

Meta shares have risen 18% since that earnings report as the company has pivoted away from the metaverse to focus on its artificial intelligence ambitions.

CEO Mark Zuckerberg expects capital spending to be between $37 billion and $40 billion this year, with “significant investment growth” expected through 2025 as the company expands its modern data center capacity. In the long term, Zuckerberg predicts, Meta will offer its customers fully automated advertising plans.

Is Meta stock a buy given its proximity to key levels?

For the full year, analysts forecast Meta's revenue to rise 19.7 percent to $161.5 billion in 2024, after rising 15.7 percent last year, according to FactSet.

About 98 percent of Meta's revenue comes from advertising placed on its “family of apps,” which includes Facebook, Instagram, Messenger, Reels, WhatsApp and Threads. The vast empire has more than 3 billion users worldwide.

Meanwhile, Meta's earnings are expected to grow this year, albeit at a slower pace than in the recovery year of 2023. Analysts forecast Meta's earnings per share to reach $21.30 in 2024, up 43% from 2023, according to FactSet. In 2023, earnings rose 73% year over year.

Meta-stock performance

The Facebook parent company rose 0.4 percent to 561.35 during Friday's trading session and ended the week up 7 percent.

The S&P 500 giant is about 3% above a 542.81 buy point, according to MarketSurge pattern recognition. The buy zone for the pattern, which extends 5% beyond the buy point, extends to 569.95.

According to the meta stock chart analysis, investors could also take advantage of an alternate entry at 544.23 from a three-week tight pattern.

The stock struggled for most of July, falling to a three-month low of 442.65 on July 25. The slide came as the broader group of Magnificent Seven stocks struggled. The group – which includes Microsoft (MSFT), Apple (AAPL), NVIDIA (NVDA), alphabet (GOOGL), Amazon (AMZN) and Tesla (TSLA) – lost more than $1 trillion in market capitalization in five days last month.

Some investors exited the outperforming stocks of major technology companies and invested in other markets as confidence in a rate cut grew.

August was better, with Meta up 10%. A strong earnings report helped reverse the trend. Meta shares rose 4.8% on August 1 after a second-quarter report beat expectations for revenue and earnings.

The stock has gained 58% so far this year.

Meta stock has a Composite Rating of 95 out of a best possible 99. The S&P 500 component also has a Relative Strength Rating of 92 and a robust EPS Rating of 96.

Please follow Kit Norton on X @KitNorton for more coverage.

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