How to Trade Meta Platforms on Q3 Earnings

Meta Platforms is set to release its Q3 earnings on Wednesday.

Analysts are worried about the continued slowdown in advertising revenues. 

META – Daily Chart

meta stock daily chart

The price of META stock has found support at the critical levels of $123 and $137.50. 

Meta Platforms has recently tried to soothe investors’ fears over the transition to the metaverse with some corporate partnerships. 

“There’s a healthy degree of scepticism among Wall Street on the magnitude of investments,” says Brent Thill, managing director at Jefferies. “Investors are absolutely 100% against this”. 

SNAP stock suffered last week with the lowest growth rate ever for the stock, and analysts’ worries are focused on advertising revenues for the Facebook platform and others. 

Investors are worried about the level of investment being dumped in the promise of a metaverse future. Meta has seen a cumulative operating loss of $9.1 billion since Q3 2021, according to Meta’s Q2 earnings. 

Social media platforms faced with soaring inflation and interest rates have led advertisers to tighten their belts. Some investors would like to see Meta focus back on finding and retaining advertisers rather than betting on virtual worlds. 

Meta’s advertising has not been too bad over the last two quarters, with the company pulling in almost $27 billion in Q1 and over $28 billion in Q2, which is similar to 2021 levels. However, ad revenue hasn’t been enough to win the fight against rising expenses. Net income dropped to $14.2 billion, down from $19.9 billion a year earlier. Q3 is expected to show an increased focus on ad revenue and user engagement to put investors’ minds at ease. But according to FactSet, ad revenue will still be down around 4% at $27.2 billion. 

Investors are likely looking at the bottom from these two technical levels, and they could see a further rally in META stock if ad revenues outperform.

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