Facebook parent Meta plunges 20% as earnings forecast miss the Mark

Laptop keyboard with social media likes and love icons

Meta is investing heavily in the “metaverse,” a virtual world where the internet is bought to life in 3D. However, Meta relies on adverting dollars and new users to drive revenue in the meantime.

A combination of higher costs, increased competition, weaker revenue forecasts, and no growth in new users in the fourth quarter, enough to panic investors. 

The share price of Meta is trading over 20% lower, near $250 in the aftermarket, indicating that over $150 billion will be wiped from the company’s market capitalization when the stock resumes full trading.

The earnings miss compounds the woes of Meta shareholders, who have seen the stock price fall from record highs in recent months as the company fights regulatory battles on several fronts. And as Chief Executive, Mark Zuckerberg leads the company into the unchartered waters of the Metaverse.

Furthermore, the tech sector has fallen out of favour in recent months as higher interest rates undermine the value of future cash flows from growth stocks. This is best illustrated by a 17% fall in the tech-heavy Nasdaq Index in the first four weeks of 2022.

Meta Share Price Chart

Presuming the share price of Meta opens tonight near where it is trading currently (at $250), it will be trading below a layer of support now resistance at $290/300. The share price needs to rebound above this level to avoid a deeper retracement.

On the downside, support is viewed between $244/$231, which encapsulates horizontal support, and the 61.% Fibonacci retracement from the Covid $137.10 low to the September 2021, $384.33 high.

Meta Daily Chart 3rd of Feb

Source Tradingview. The figures stated areas of February 3rd, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

How to trade with City Index

You can trade with City Index by following these four easy steps:

  1. Open an account, or log in if you’re already a customer 

    Open an account in the UK
    Open an account in Australia
    Open an account in Singapore

  2. Search for the company you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade


Open an account today

Experience award-winning platforms with fast and secure execution.

Web Trader platform

Our sophisticated web-based platform is packed with features.
Economic Calendar