Meta Platforms Stock Lost 28% In One Week, What’s Next?

Meta Platforms’ stock (NASDAQ: META) has lost 28% in the last week, significantly underperforming the S&P 500 (up 1.9%). Further, the same trend was observed over the last ten days (-30% vs -5.3%) and one month period (-31% vs 8.1%). 

The social media giant missed the consensus estimates in the third quarter of 2022, the second quarter in a row. It reported a 4% decline in net revenues to $27.7 billion, mainly due to a 4% drop in advertising revenues. While the key metrics like family daily active people (DAP) and Facebook daily active users (DAUs) increased by 4% and 3% respectively, average price-per-ad decreased by 18% y-o-y. The advertising revenues primarily suffered because of online advertisement budgets cuts due to a tough macroeconomic scenario and higher competition from rivals. Further, the firm provided revenue guidance of $30-$32.5 billion for Q4, which is lower than the year-ago period. On the cost front, the company’s operating margin decreased from 36% to 20% in the quarter due to higher research & development and general & administrative expenses. Overall, the weak Q3 results were the main reason behind the negative stock movement.

Now, is META stock set to drop further, or could we expect some recovery? We believe that there is a 59% chance of a rise in META stock over the next month (21 trading days) based on our machine-learning analysis of trends in the stock price over the last ten years. See our analysis on Meta Platforms’ Stock Chance of Rise.

Twenty-One Day: META -31%, vs. S&P500 8.1%; Underperformed market

(less than 1% likelihood event; 59% probability of rise over next 21 days)

• Meta Platforms stock lost 31% over the last twenty-one trading days (one month), compared to a broader market (S&P500) increase of 8.1%
• A change of -31% or more over twenty-one trading days is a less than 1% likelihood event, which has occurred 17 times out of 2516 in the last ten years
• Of these 17 instances, the stock has seen a positive movement over the next twenty-one trading days on 10 occasions
• This points to a 59% probability for the stock rising over the next twenty-one trading days

Ten Day: META -30%, vs. S&P500 5.3%; Underperformed market

(less than 1% likelihood event)

• Meta Platforms stock decreased 30% over the last ten trading days (two weeks), compared to broader market (S&P500) gain of 5.3%
• A change of -30% or more over ten trading days is a less than 1% likelihood event, which has occurred 4 times out of 2516 in the last ten years
• Of these 4 instances, the stock has seen a positive movement over the next ten trading days on no occasions

Five Day: META -28%, vs. S&P500 1.9%; Underperformed market

(less than 1% likelihood event; 25% probability of rise over next five days)

• Meta Platforms stock lost 28% over a five-day trading period ending 10/31/2022, compared to the broader market (S&P500) gain of 1.9%
• A change of -28% or more over five trading days (one week) is a less than 1% likelihood event, which has occurred 4 times out of 2516 in the last ten years
• Of these 4 instances, the stock has seen a positive movement over the next five trading days on one occasion
• This points to a 25% probability for the stock rising over the next five trading days

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[1] Month-to-date and year-to-date as of 11/1/2022
[2] Cumulative total returns since the end of 2016

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