$Meta Platforms, Inc.(META)$ is scheduled to report quarter results for period ending 31 March 2024 on 24 April 2024 after market close. Meta is expected to report is rise in quarterly revenue with a 26.2% increase in revenue to $36.156 billion from $28.65 billion a year ago.
According to the guidance Meta provided on 01 Feb 2024, the revenue for the period is expected to be data.The company's guidance on February 1 2024, for the period ended March 31, was for revenue between $34.50 billion and $37.00 billion.
What would help the revenue is the increased spending on ads and also the recovery momentum in advertising spend to continue through 2024. What would be also in investors lookout is their new AI chips and how they are going to capture the already congested LLM market.
Product Enhancement and Latest Meta AI Chip
There are already many US big tech firms started to develop their own in-house chips in recent years to slowly get away from the reliance on external suppliers and also most importantly to reduce costs. Meta has also followed the trend and have done pretty well having found success in its chip development efforts.
With the recent unveiling of its next-gen Meta Training and Inference Accelerator (MTIA) in-house artificial intelligence (AI) chip, which is set to be the successor to last year's MTIA v1, next-gen MTIA is built on a 5nm process node (versus previous 7nm), boasts more internal memory and runs at a higher average clock speed than its predecessor.
What market and investors would be seeking is more clarity on how the new chips could support or enhance Meta’s new generative AI products and services, and its capabilities in boosting the effectiveness of its ads, such as its ranking and recommendation algorithm models.
These should translate to better revenue and also maybe open up some new businesses.
Fast Bearish Crossover Expected - Could Be Sign Of Trend Reversal
Technical has indicated that Meta is experiencing a fast bearish crossover, this happen when the moving averages are all crossed in a bullish uptrend but the current stock price drops in a bearish crossover before the moving averages catch up.
This might indicate an early sign of trend reversal or a pullback testing the uptrend. I will share more on the technical analysis on how Meta might move pre and post earnings.
Meta Platforms (META) Last Reported Earnings
META last reported earnings on 01 Feb 2024 after the market close (AMC). META shares gained +20.3% the day following the earnings announcement to close at 474.49. Following its earnings release, 81 days ago, META stock has drifted +1.5% higher.
From the time it announced earnings, META traded in a range between 452.52 and 531.49. The last price (481.73) is closer to the lower end of range.
Estimated implied straddle for upcoming earnings is 8.8%. I am expecting Meta to give a pretty strong price effect after its earnings, as the ads spending recovery should give Meta quite a good number on the revenue.
Meta Platforms (META) IV Percentile Rank
META implied volatility (IV) is 49.6, which is in the 94% percentile rank. This means that 94% of the time the IV was lower in the last year than the current level. The current IV (49.6) is 5.5% above its 20 day moving average (47.0) indicating implied volatility is trending higher.
Meta Platforms (META) IV vs 20-Day HV
The current IV (49.6) in META is 52.3% above its 20 day HV (32.6) suggesting that options markets are predicting future volatility to trade above the most recent 20 day realized volatility.
Meta Potential Reversal From Falling Wedge
The Falling Wedge is a bullish pattern that begins wide at the top and contracts as prices move lower. This price action forms a cone that slopes down as the reaction highs and reaction lows converge.
As a continuation pattern, the falling wedge will still slope down, but the slope will be against the prevailing uptrend. As a reversal pattern, the falling wedge slopes down and with the prevailing trend. Regardless of the type (reversal or continuation), falling wedges are regarded as bullish patterns.
Potential Bullish Reversal - Decrease In Downside Momentum
As seen in the chart below, we could see that selling pressure may diminish, but we need to be aware that only when resistance is broken, then we could see demand (buying) coming back.
I would monitor and look out for the breakout, and also wait for MACD signal to reverse before we confirm Meta is going bullish upside.
Summary
With recovery in ads spending, this should provide a good landing for Meta revenue and earnings, but market might react differently on how Meta planned to deploy its newly developed chips for its product and services.
This shall form the outlook, as for the stock price, Meta look like it is going for a reversal but we will need to look out for the demand (buying) strength closely.
Appreciate if you could share your thoughts in the comment section whether you think Meta is going to provide a strong earnings and with the potential reversal, can we expect Meta to trade on the upside?
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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