Chart of the week: is there 50% upside at the fallen tech star?
6th September 2022 12:57
by John Burford from interactive investor
Any hint of better earnings could be the spark that lights the rocket at this household name, believes analyst John Burford.Â
Meta is very cheap – is it a buy?
This former social media darling has certainly hit the skids this past year. In that time, the shares have lost a mammoth 60%. Last year, Facebook, now Meta Platforms (NASDAQ:META), was riding high as the company bought Instagram and WhatsApp and looked to bolster its position as the undisputed giant of the social media world.
But when positive sentiment becomes extreme, which it was, that is usually the best time to expect little further share price advances and to take at least some profits off the table.
- Discover more: Buy international shares | Interactive investor Offers | Most-traded US stocks
And today, the reverse of that set-up appears to be in play, with bullish sentiment on the floor (or is it in the basement?).
So today, with the share price languishing around the $160 region – down from the all-time high last September at $385 – can a buying programme be justified?
I believe so, and this is why:
Past performance is not a guide to future performance.
The standout takeaway pattern is the clear five-wave decline off the all-time high last September, which meets the support line on a very strong momentum divergence.
This five-wave pattern is textbook with a long and strong third wave, and the move down to the fifth wave appears complete or very nearly so.
If a rally phase can get started near term, the advance should be very powerful with my main target around the $250 region.
The downside appears very limited, but a move through the $145 print would be problematical, although the odds for a sharp snap-back if that occurs are high.
Facebook has been a terrific income generator in the past and can be again. I am quite sure the company is working on the necessary changes. Already, they are planning on introducing paid-for features on Facebook and Instagram.
Also, ad revenues have room to grow as the pressure for companies to fight looming downturns in business from the energy crisis appear.
Any hint of better earnings could be the spark that lights the Meta rocket!
John Burford is a freelance contributor and not a direct employee of interactive investor.
These articles are provided for information purposes only. Â Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. Â The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
Disclosure
We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.
Please note that our article on this investment should not be considered to be a regular publication.
Details of all recommendations issued by ii during the previous 12-month period can be found here.
ii adheres to a strict code of conduct. Â Contributors may hold shares or have other interests in companies included in these portfolios, which could create a conflict of interests. Contributors intending to write about any financial instruments in which they have an interest are required to disclose such interest to ii and in the article itself. ii will at all times consider whether such interest impairs the objectivity of the recommendation.
In addition, individuals involved in the production of investment articles are subject to a personal account dealing restriction, which prevents them from placing a transaction in the specified instrument(s) for a period before and for five working days after such publication. This is to avoid personal interests conflicting with the interests of the recipients of those investment articles.