To The Moon

$Meta Platforms, Inc.(META)$ is also set to report on Wednesday October 30, 2024, with the focus on election ad spending and whether the company can turn its Reality Labs investments (the Metaverse) into something tangible. While its core social media business (Instagram and Facebook) is likely to remain solid, any surprises in ad spending forecasts will drive the stock.

Key Focus Points:

• How strong is ad spending momentum heading into the 2024 election?

• Will Reality Labs expenses shrink, allowing for margin expansion?

• Can Reels (Instagram’s short video feature) successfully compete with TikTok?

I have high conviction in Meta Platforms (META), particularly due to the dual tailwinds of election ad spending and improving operational efficiency. I believe these two catalysts will drive the stock higher, with election spending accelerating into 2024. Meta has also demonstrated discipline in managing expenses by streamlining Reality Labs’ budget, which could provide further support for profitability.

Here are two high-probability trading ideas for META based on this thesis.

Trading Idea #1: Bull Call Spread

This trade captures potential upside without taking excessive risk, with the expectation that Meta's earnings will exceed expectation and the stock will rise.

• Trade Structure:

  Buy 1 META $570 call (expiring in 2 weeks) Sell 1 META $590 call (same expiration)

• Rationale: This strategy limits the capital required while providing profit potential if Meta trades above $570 after earnings. Selling the $590 call helps reduce the premium paid.

• Max Profit: $20 per share minus net premium paid

• Max Loss: Limited to the net premium paid

• Breakeven: $570 + net premium paid

Trading Idea #2: Cash-Secured Put

This is a more conservative trade for those willing to acquire META stock at a lower price if the stock pulls back after earnings.

• Trade Structure:

  Sell 1 META $565 put (expiring in 2 weeks) Collateral: $56,500 cash (secured)

• Rationale: If META stays above $560, you keep the premium as profit. If it dips below $560, you get to buy the stock at a discount with the premium received effectively lowering your entry price.

• Max Profit: Premium collected

• Max Loss: Effective if META drops below $565; you'll own the stock at $565 minus the premium received.

Why Meta Can Replicate Tesla's Surge

While Meta lacks the headline-grabbing appeal of Tesla’s EV business, it stands to benefit from election ad spending and disciplined cost control—two factors that can drive significant post-earnings upside. Moreover, improvements in Reels and increasing adoption of AI for ad targeting provide further growth potential. With these catalysts aligning, I expect strong earnings and positive forward guidance to propel the stock higher.

Conclusion

With back-to-back earnings reports from the Magnificent 7, next week will be crucial for market direction. Tesla’s surge shows the market’s hunger for companies with a solid growth story, and Meta Platforms could replicate that success with the dual tailwinds of election spending and improved efficiency.

For investors looking to capitalize, the bull call spread offers leveraged upside with limited risk, while the cash-secured put provides a more conservative way to enter the stock at a discount.

Will Meta ride the earnings wave and rally like Tesla? My bet says yes—let’s see how it plays out.

Please DYODD.