Facebook parent company Meta Platforms is the IBD Stock Of The Day for Friday. Meta stock has formed a consolidation pattern and is slowly recovering from a big slide in April, as investors debate the value of the social media giant's AI push.
Mark Zuckerberg's Meta further detailed part of its generative AI strategy Thursday. The company unveiled new AI-powered tools for businesses on WhatsApp at a conference in Brazil. Meta is looking to build AI agents that can help business users quickly respond to customers.
On the stock market today, Meta stock slipped a fraction to close at 492.96. The stock's pattern has a buy point of 531.49, according to MarketSurge. Shares also made a strong move above Meta's 50-day moving average on Wednesday. Still, Meta's relative strength line is below recent highs, following a big drop-off after its first quarter earnings report.
AI Tools For WhatsApp
Meta stock slid 10.5% following its April 24 earnings report, despite posting Q1 results that easily topped expectations. But Meta paired a lower-than-expected Q2 revenue forecast with a higher-than-expected increase in projected 2024 costs.
Zuckerberg has pledged to invest heavily on optimizing its data centers to support its AI vision. Investors are uneasy about that spending.
A big question is how AI will pay off for the social media giant. Zuckerberg is taking what he calls an open source approach to AI, offering its Llama large language model to developers free of charge. The company has also embedded its Meta.ai chatbot into its Facebook and Instagram services.
However, Zuckerberg told analysts in April that there is potential for a "massive business" from providing AI-powered enterprise messages and placing ads within AI chatbot interactions, among other products.
Meta offered a deeper look at its strategy for that market Thursday at its annual Conversations event. The company said it is training its AI algorithms to be able to respond to common questions that businesses receive on WhatsApp. Meta also plans to use AI to allow businesses to create ads on Facebook and Instagram.
"Any business should be able to quickly stand up an agent that can talk to your customers, provide support and facilitate commerce," Zuckerberg said in a video presentation during the event.
Meta acquired WhatsApp for $19 billion in 2014 and has been slowly finding ways to monetize the massively popular free messaging app. Enabling messaging for businesses is part of that effort. Click-to-message ads, which open up a WhatsApp or Messenger chat with businesses, have already reached a $10-billion annual sales run rate, Zuckerberg told analysts on a call last year.
"We continue to see more green shoots of business messaging monetization emerging at Meta and see them as supportive of a significantly higher-than-consensus Other revenue estimates for Meta's Family of Apps," New Street Research analyst Dan Salmon wrote to clients following Meta's presentation Thursday.
Recent Meta Stock Action
Following the late April earnings letdown, Meta stock has slowly been working its way back up. Meta retook its 21-day moving average on May 8, according to MarketSurge charts, and maintained support at that level. Shares overtook the 50-day moving average on June 5.
MarketSurge shows that Meta stock has formed a consolidation pattern with a potential buy point at 531.49, the high mark for Meta stock before its post-Q1 earnings slide.
The IBD Stock Checkup tool shows Meta stock with a Relative Strength Rating of 94 out of a best-possible 99, indicating the stock has still outperformed most of the market over the past 12 months.
Meta shares hold an IBD Composite Rating of 98 from a best-possible 99. The score means Meta stock currently tops nearly all other stocks in terms of key performance metrics and technical strength.
But Meta stock holds a near-lowest-possible Accumulation/Distribution Rating of D- on an A+ to E scale, with A best and E worst. That rating analyzes price and volume changes in institutional ownership for a stock over the past 13 weeks. The current rating indicates heavy selling by institutions over that period.
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