Meta Stock Price Analysis as Advertisers Shift Spending on the Platform

Summary:
• The Meta stock price continued its rally yesterday, surging by more than 5 per cent and extending a two-day bullish streak to three.

The Meta stock price continued its rally yesterday, surging by more than 5 per cent and extending a two-day bullish streak to three. The rally also saw Meta continue to push upwards for the month, with gains in July now standing at 9 per cent. 

The recent rally comes amidst reports that Meta is struggling in the market. The main problem plaguing the company today is that advertisers are leaving the platform in droves. According to reports, the Meta platform’s dominance in the advertisement industry is progressively losing to its competitors, as more businesses prefer to invest in other digital platforms for their advertisements. 

There are also reports that the problems may be much deeper than meets the eye. For instance, analysts expect the Meta platform to record zero growth in the second quarter of this year. This will be the company’s first failure to turn a profit. While addressing the problem, Mark Zuckerberg, Meta Co-founder, termed the current situation in the company one of the worst downturns they have ever experienced in recent history, according to Reuters. 

In what could be seen by many as the company being in a perfect storm, most of its advertisers are not only looking for other alternatives for digital advertisements but also abandoning the platform and migrating to other platforms. 

The latest development is problematic for investors for a number of reasons. First, lack of revenue growth is likely to hit investors’ pockets and possibly result in the Meta stock price resuming a bearish trend. There are also forecast reports indicating the company will post 16 per cent growth for all of 2022, which will be down from the 37 per cent posted in 2021. This will also impact the company and possibly its stock.

Meta Stock Price Analysis

Looking at the chart below, I expect the current bullish trend to continue. This is despite data showing problems with Meta operations, losing advertisers and expected low revenues. My analysis is for the next few sessions. However, in the long-term, I expect that as Facebook’s problems become clearer, share prices will start to drop, and there is a high likelihood that we may see prices trading below the $150 price level.

Meta Daily Chart