Benzinga - by Melanie Schaffer, Benzinga Editor.
Meta Platforms, Inc (NASDAQ: META) is set to print third-quarter financial results after the market closes Wednesday. The stock, formerly named Facebook, was falling heading into the event.
When the tech giant printed its second-quarter results on July 26, the stock closed over 4% higher the following day before forming a quadruple top pattern near the $326 level and subsequently retracing.
For the second quarter, Meta reported EPS of $2.98, which beat the Street estimate of $2.91. The company beat on the top line, printing revenues of $32 billion that came in above the $31.12-billion estimate.
For the third quarter, analysts estimate Meta will print earnings per share of $3.42 on revenues of $31.65 billion.
Ahead of the event, Seaport Global analyst Aaron Kessler initiated coverage with a Buy rating on Meta and announced a price target of $365. Read More...
From a technical analysis perspective, Meta’s stock looks bearish, falling through a falling channel pattern and losing support at the 50-day simple moving average (SMA).
It should be noted that holding stocks or options over an earnings print is akin to gambling. Stocks can react bullishly to an earnings miss and bearishly to an earnings beat.
Options traders, particularly those who are holding close-dated calls or puts, take on extra risk because the institutions writing the options increase premiums to account for implied volatility.
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The Meta Chart: Meta began trading in a falling channel pattern on Oct. 12 and has been making a series of lower highs and lower lows. The most recent lower high was formed on Tuesday at $318.35 and the most recent confirmed lower low was printed at the $306.47 mark on Friday.
- On Wednesday, Meta fell under the lower descending trend line of the channel, which aligns with the 50-day simple moving average (SMA). The move was taking place on increasing volume, indicating the bears are attempting to gain control.
- If Meta receives a bullish reaction to its earnings print, the stock is likely to break up from the channel on higher-than-average volume, which could signal a longer-term reversal to the upside is on the horizon. If the stock suffers a bearish reaction to the print and remains under the 50-day SMA, the downtrend will accelerate and a backtest of the 200-day SMA could be on the horizon.
- Meta has resistance above at $315.88 and at $325.18 and support below at $299.50 and at $287.63.
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