Long Trade Idea
Enter your long position between $720.18 (the intra-day low of its last bullish candlestick) and $738.50 (yesterday’s intra-day high).
Market Index Analysis
- Meta Platforms (META) is a member of the NASDAQ 100, the S&P 100, and the S&P 500 indices.
- All three indices attempt to hold on to their record gains, but the third quarter earnings season could magnify bearish cracks.
- The Bull Bear Power Indicator shows a negative divergence and does not confirm the uptrend.
Market Sentiment Analysis
Netflix provided the first significant earnings disappointment after the bell, followed by Mattel, and investors look ahead to Tesla earnings today, the first of the Magnificent Seven stocks to report. GM reported upbeat earnings, but expiring EV credits could cloud Tesla’s outlook and trigger a sell-off in equity markets. The government shutdown continues, President Trump keeps markets guessing about his approach to the US-China trade war, and doubt persists about the quality of this week’s inflation data.
Meta Platforms Fundamental Analysis
Meta Platforms is one of the world’s biggest spenders on research & development, a member of the US Big Five Tech Companies, and the Magnificent Seven. It is an industry leader in the metaverse and has now embarked on a hiring spree to become a leader in advanced AI and superintelligence.
So, why am I bullish on META ahead of its earnings?
Meta addressed massive financing needs by securing a $27 billion financing deal for a significant data center project. I am bullish about its AI leadership position and long-term vision. Meta also sees a bullish shift in consumer sentiment. I am equally optimistic about its strategic partnership with Arm Holdings to produce energy-efficient data center chips and enhance its AI strategy.
Meta Platforms Fundamental Analysis Snapshot
The price-to-earning (P/E) ratio of 26.60 makes META an inexpensive stock. By comparison, the P/E ratio for the NASDAQ 100 is 38.60.
The average analyst price target for META is $866.85. It suggests excellent upside potential, with manageable downside risks.
Meta Platforms Technical Analysis
Today’s META Signal
META Price Chart
- The META D1 chart shows price action inside a bullish price channel.
- It also shows price action below its ascending Fibonacci Retracement Fan.
- The Bull Bear Power Indicator is bullish with an ascending trendline.
- The average bullish trading volumes are higher than the average bearish trading volumes over the past two weeks.
- META failed to match the record run of the NASDAQ 100 but has accumulated bullish catalysts.
My Call on Meta Platforms
I am taking a long position in META between $720.18 and 738.50. META trades at a low valuation, especially for an AI play, and its PEG ratio indicates it is undervalued. I am bullish about its strategic partnership with ARM Holdings and the positive impact on its data center investments.
- META Entry Level: Between $720.18 and $738.50
- META Take Profit: Between $840.85 and $866.85
- META Stop Loss: Between $662.67 and $690.51
- Risk/Reward Ratio: 2.10
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