Meta Under Pressure

Shares in tech giant Meta have come under heavy selling pressure ahead of the US open today as traders digest the group’s latest earnings report. Despite beating both earnings and revenues forecasts, investors reacted negatively to the details of Meta’s spending plans. On the numbers front, EPS came in a %6.03 vs $5.22 expected a 15% beat. Revenues were also seen higher at $40.6 billion vs $40.2 billion expected, just shy of a 15 beat. Both results represent a clear increase on the prior quarter and the same quarter a year earlier. However, it was the spending details which sabotaged what should have been a bullish reaction.

Expenses Increase

Meta detailed that it expects full year capital expenses in 2024 to rise to $38-$40 billion, up from the prior range of $37-$40 billion. Additionally, Meta noted that it expects a significant rise in capital expenditure in 2025 as the company expands its infrastructure and realises depreciation costs.

Spending Concerns

Elevated spending has been a major source of concern for Meta investors in recent years. With the company putting a huge focus on R&D for its growing AI business, there is a fear that this investment might not realise the returns that meta is looking for. The AI outlook has had several wobbles this year and if the sector does start to retreat in terms of popularity, Meta’s expenditure could leave it vulnerable to heavy losses.

Technical Views

Meta

The rally in Meta stock has stalled for now into the prior highs around 604.63, with the bull channel highs capping the move there too. While price holds within the bull channel above 542.28, focus is on a fresh push higher. However, if we break below there, risks are skewed towards a test of deeper support at 455.21 next.