Mark Zuckerberg, CEO of Meta Platforms
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Wednesday just might be the day that Meta Platforms , the parent company of Facebook and Instagram, sees its stock bounce off rock bottom.
Shares in the social media giant have had an abysmal time of late. Following weak quarterly earnings and a dismal outlook, Meta (ticker: FB) went into free fall last week, notching the largest one-day loss in market capitalization in U.S. history on Feb. 3, when the stock price collapsed by 26%.
It has been downhill ever since. The shares have crumbled a further 7% as of Tuesday’s close, with the stock — priced at around $220 —d own some 43% from its all-time high in September.
Things may be looking up: Meta stock was 1.5% higher in premarket trading Wednesday, outpacing buoyancy in the wider technology sector. Futures for the Nasdaq 100 index, which tracks some of the biggest U.S. tech stocks, indicated a higher open of 1.2%.
Are investors finally buying the dip? Market participants were already talking about doing just that when Meta began its nosedive last week.
“Meta’s shares were attractively valued going into these numbers and any further setback makes it an even more compelling opportunity for long-term investors,” Christopher Rossbach, the chief investment officer of Anglo-Swiss asset manager J. Stern & Co., said at the time.
But there’s a wider debate to be had about whether Meta stock looks attractively valued after the recent selloff. So far, the lack of rebound suggests most investors are not, in fact, buying the dip. As Barron’s reported, this “reflects the serious issues Meta raised with its earnings.”
Wall Street has been trying to make sense of Meta’s results. The most dire interpretation suggests that users are leaving the platform for rivals like TikTok, and that advertising revenue is drying up as a knock-on effect from changes to Apple
‘s (AAPL) privacy rules. Not good.
Wednesday’s price action could signal that the worst is over. Investors may begin piling into Meta shares again, but there’s no question that the company faces challenges, and that could be reflected in the stock price over the longer term.
Write to Jack Denton at [email protected]
