Among the Magnificent Seven in the technology sector, Meta Platforms (META) stood out for its underperformance. Tesla (TSLA), which reported falling electric vehicle sales, especially in Europe, saw its stock price more than double from its 52-week low. Alphabet (GOOG) traded at all-time highs after releasing its latest AI offering.
Meta struggled, entering a downtrend that finally ended in mid-November. Peak fear from the AI bubble sell-off disappeared. Investors decided to dismiss circular financing among Nvidia (NVDA), OpenAI, and a slew of other firms.
META stock rose from below $600 to trade toward its 50-day simple moving average as of last week. The downtrend pattern that formed since August, however, is still in place. This chart pattern suggests that META shares are only enjoying a technical rally.
Metaverse Budget Cut
AI investors bought META stock on reports that Meta would cut 30% of its operating expenditures in its metaverse. The firm already lost more than $70 billion in this venture. Metaverse’s Horizon Worlds reportedly had 900 users. However, Meta sold over 20 million Meta Quest headsets cumulatively.
Investors might point to projections of 30 million units annually by 2030. This forecast is potentially wishful thinking. Consumers typically do not embrace headsets. For now, they prefer AR on the phone.
Your Takeaway
Meta shares earn a neutral rating. The company needs to demonstrate stronger developments in AI and growth in Meta Quest headsets before getting a stock rating upgrade.
