Fundamentally, one of the central catalysts of social media and tech juggernaut Meta Platforms Inc. (NASDAQ:META) is its operating capacity as an attention refinery. In effect, raw human time enters Meta's vast ecosystem while monetizable intent comes out. In other words, Meta doesn't necessarily need consumers to spend more money — instead, it needs advertisers to believe Meta remains the most efficient avenue to deploy budgets.
In that respect, it's difficult to argue against the hard performance metrics. Sure, META stock hasn't exactly been impressive this year, gaining roughly about 11%. In contrast, the benchmark Nasdaq Composite index is much stronger, delivering a return of more than 19% during the same period. However, over the past five years, META has stormed to a gain of about 134%, making the Nasdaq's return of 81% in the same period look pedestrian.
On a fundamental note, Meta's core business extends far beyond its social networking platform, which is obviously massive. Rather, the tech giant's ability to continuously optimize the conversion of attention into advertisement performance distinguishes it from the competition. With advertisers continuing to see superior returns on investment, Meta has basically been able to print cash.
Of course, artificial intelligence has had an accretive influence on the overall business. Thanks to generative AI protocols improving targeting, creative optimization and ad auction efficiency, Meta continues to dominate in multimedia engagement. From a financial perspective, bullish investors might argue that the company's AI spending represents a front-loaded investment that should pay off thanks to improved efficiencies in its core businesses, along with the creation of new revenue streams.
It’s also worth mentioning that the social media leader has been consistently hitting its mark on the financial front. In its most recent earnings report, Meta posted a profit of $7.25 per share on revenue of $51.24 billion, beating out consensus estimates of $6.66 and $49.41 billion, respectively. Notably, the last time Meta failed to deliver the goods on either the top or bottom line was back in the last quarter of 2022.
Still, not everything is aligned bullishly for META stock. One of the biggest concerns facing the underlying company is extremely high spending, especially on AI. As recently reported, sentiment for the security is straining, with Meta pushing capital spending to a range between $70 billion to $72 billion for 2025, a gargantuan jump from its 2024 outlay.
Moreover, what's problematic for stakeholders is that the market is responding to the elevated expenditures with apparent skepticism. For example, in the trailing six months, META stock is down approximately 8%, which stands in sharp contrast to many leading tech players.
The Direxion ETFs: With both sides presenting compelling narratives, financial services provider Direxion brings to the table two countervailing exchange-traded funds. For the optimists, the Direxion Daily META Bull 2X Shares (NASDAQ:METU) tracks 200% of the performance of META stock. On the other end, the Direxion Daily META Bear 1X Shares (NASDAQ:METD) tracks 100% of the inverse performance of the namesake security.
A central ethos undergirding these Direxion ETFs is access — in particular, access to a convenient mechanism for speculation. Generally, those interested in leveraged or inverse positions must engage the options market, which brings with it unique complexities. With Direxion's unique funds, however, traders can acquire the underlying units in a similar vein to any other publicly traded security. Therefore, the learning curve is mitigated.
Still, prospective participants must be aware of the risks. First, adding leverage or incorporating an inverse profile to an underlying security tends to amplify volatility risks. Second, Direxion ETFs are designed for exposure lasting no longer than one trading session. Going beyond this recommended period may expose unitholders to positional decay tied to the daily compounding effect.
The METU ETF: Since the start of the year, the METU ETF has lost about 6%. In the past six months, the bull fund slipped roughly 25%.
- Currently, METU is attempting to regain momentum. While the price action is wrangling with the 20-day exponential moving average, it's decisively below the 50 and 200 DMAs.
- Volume, which was elevated in November, may present a concern in December due to fading acquisition among the bulls.
The METD ETF: From January's opening volley, the METD ETF dropped by about 18%. However, in the trailing half-year period, the bear fund gained more than 5%.
- While the general performance of METD has been poor, the recent surge in value suggests rising interest in the bearish position.
- Accumulative volume swung higher in November and is relatively elevated in December, implying sustained skepticism toward META stock.
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