Trading Strategies For Meta Platforms Stock Before And After Q2 Earnings

Zinger Key Points
  • Analysts estimate Meta will print earnings per share of $2.91 on revenues of $31.12 billion.
  • Meta is trading in a rising channel pattern, looking to print a hammer candlestick ahead of earnings.

Meta Platforms, Inc META is set to print second-quarter financial results after the market closes Wednesday. The stock was trading over 1.5% higher heading into the event.

When the tech giant printed its first-quarter results on April 26, the stock surged over 13% the following day and then continued in a steep uptrend.

For the first quarter, Meta reported EPS of $2.20, which beat the Street estimate of $2.03. The company beat on the top line, printing revenues of $28.64 billion that came in above the $27.62-billion estimate.

For the second quarter, analysts estimate Meta will print earnings per share of $2.91 on revenues of $31.12 billion.

Ahead of the event, Mizuho analyst James Lee maintained a Buy rating on Meta and raised a price target from $280 to $350. New Street Research analyst Dan Salmon upgraded the stock from Neutral to Buy and announced a $350 price target. The new price targets suggest about 19% upside for Meta. Read More...

From a technical analysis perspective, Meta’s stock looks mixed, trading within a falling channel pattern that is bullish for the short term but could be bearish down the road.

It should be noted that holding stocks or options over an earnings print is akin to gambling. Stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

Options traders, particularly those who are holding close-dated calls or puts, take on extra risk because the institutions writing the options increase premiums to account for implied volatility.

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The Meta Chart: Meta started trading in a rising channel on Feb. 27, and the stock has been making a fairly consistent series of higher highs and higher lows within the formation. The most recent higher high was formed on July 19 at $318.68 and the low was printed at the $288.30 mark on Monday.

  • On Wednesday, Meta was working to print a hammer candlestick, which could indicate higher prices will come again Thursday. If that happens, traders can watch for the stock to find resistance at the upper ascending trend line of the channel.
  • If Meta suffers a bearish reaction to its earnings print and falls lower, the stock could break down from the lower trend line of the pattern, which could accelerate downside pressure. If that happens, Wednesday’s high-of-day will serve as a lower high, which would confirm a downtrend.
  • Meta has resistance above at $299.50 and at $315.88 and support below at $287.63 and at $278.08.

Photo via Shutterstock. 

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