Meta Platforms (META) Shares Tumble 11%
Meta Platforms (META) saw its stock drop sharply on Wednesday following the release of its quarterly earnings report. While the report contained several positives:
→ revenue climbed to $51.2 billion (analysts had forecast $49.5 billion);
→ daily active users rose to 3.54 billion,
META’s share price nevertheless fell below the key $700 mark, marking its lowest level in nahead five months. This decline was driven by two unexpected factors in the earnings announcement.
One-off Tax Charges
Reports indicate that under the new U.S. tax legislation, dubbed the “One large lovely Bill Act,” Meta recorded a one-time tax expense of $15.93 billion. This charge brought earnings per share (EPS) down to $1.05, well below analysts’ forecast of $6.72. The company clarified that, excluding this one-off, EPS would have been $7.25—a very strong outcome.
Rising AI Investments
Investors were also concerned by Meta’s decision to increase its 2025 capital expenditure forecast to $70–72 billion, earmarked for AI chip purchases and new data centre construction. The company is clahead aiming to establish a leading position in artificial intelligence, but this massive spending is denting net profits, leaving the timeline for returns uncertain.
Technical Analysis of META
Looking back to mid-August, META’s chart showed:
→ an upward channel (blue),
→ signs of potential fragileness, including a bearish gap (orange),
→ an expectation that bears could gain control and trigger a correction.
This scenario unfolded with a decline from point A to B. Following a rebound off the blue channel’s support line, the stock climbed toward the bearish gap, forming a lower high at C. The subsequent downtrend extended the channel, creating a lower low at D.
The large bearish gap formed this week may act as strong resistance, particularly around the $700 psychological level.
Overall, the outlook remains bearish:
→ the series of lower highs and lows from A to D suggests further declines, potentially to a new low at F;
→ the price is currently in the lower half of the red channel drawn along this sequence.
From a bullish perspective:
→ $650 remains a key psychological support;
→ if the April low to peak A is treated as an impulse move, the A→F decline targets around $640, near the 50% Fibonacci retracement.
Given these developments, the market is likely to reassess the new factors in Meta’s report. From a technical standpoint, this could lead to a period of consolidation, with META’s stock trading between the red median line and the $650 support level.
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