Whats going on with Meta Stock? Should you buy the dip?

About this video

• Video Title: Whats going on with Meta Stock? Should you buy the dip?
• Channel: Jack Cline
• Speakers: Jack Cline
• Duration: 00:27:29

Overview

This video analyzes Meta's stock performance following its quarterly earnings report. The speaker discusses the reasons behind the stock's significant drop, including increased AI spending and a one-time tax charge. The video also delves into Meta's fundamental financial performance, key highlights from the earnings, and technical analysis of the stock charts to determine its future trajectory and whether it presents a buying opportunity.

Key takeaways

• Stock Decline: Meta's stock dropped significantly (nearly 18% from all-time highs) after its earnings report, primarily due to concerns over increased AI spending that overshadowed strong revenue and EPS growth.
• Increased Capex: Investors are wary of Meta's projected increase in capital expenditures (capex) from $66 billion to $70-72 billion, as this signifies higher costs and potential impacts on net profit.
• One-Time Charge: A substantial one-time tax charge of approximately $18 billion negatively impacted the reported net income and EPS, though this is a non-recurring event.
• Positive Fundamentals: Despite the concerns, Meta's core business shows strong growth, with revenues up 26% year-over-year and a healthy operating income increase.
• Technical Indicators: The stock is showing oversold conditions on various timeframes (daily, 4-hour, hourly), and is approaching significant support levels (200-day and 300-day moving averages), suggesting a potential bounce.
• Favorable Tax Rate: The new tax law is expected to significantly lower Meta's tax rate, potentially boosting future profits.
• Buying Opportunity: The speaker believes the current dip is an overblown reaction and presents a good "buy the dip" opportunity, especially for long-term investors, recommending dollar-cost averaging.