S&P 500 giant Meta Platforms is Friday's IBD Stock Of The Day, as the Facebook-parent declined slightly during market trade but is in a buy zone from an official entry amid Meta's nearly 60% rally this year.
The Facebook and Instagram parent company at the end of July cleared Q2 estimates with a 73% increase in earnings on 22% revenue growth. Advertising revenue growth also outpaced forecasts.
Shares of Meta have galloped 18% higher since that earnings report as the company has pivoted from the metaverse to focus on its artificial intelligence ambitions.
Chief Executive Mark Zuckerberg expects capital expenditures to range from $37 billion to $40 billion this year, with "significant capital expenditures growth" for 2025 as it builds out its advanced data center capacity. Long-term, Zuckerberg predicts Meta will offer fully-automated advertising plans to clients.
Is Meta Stock A Buy As It Hovers Near Key Level?
For the full year, analysts project that Meta's revenue will rise 19.7% to $161.5 billion in 2024, after climbing 15.7% last year, according to FactSet.
About 98% of Meta's revenue is from advertising placed on its "Family of Apps." The category includes Facebook, Instagram, Messenger, Reels, WhatsApp and Threads. The massive empire has more than 3 billion global users.
Meanwhile, Meta's earnings are expected to grow this year but at a slower rate compared to Meta's 2023 recovery year. Analysts project Meta EPS of $21.30 in 2024, up 43% from 2023, according to FactSet. In 2023, earnings increased 73% year over year.
Meta Stock Performance
The Facebook-parent gained 0.4% to 561.35 during Friday's market session, ending the week up 7%.
The S&P 500 giant is about 3% above an 542.81 buy point, according to MarketSurge pattern recognition. The buy zone for the pattern, which stretches 5% beyond the buy point, extends to 569.95.
Investors could also use an alternative entry of 544.23 from a three-weeks tight pattern, according to Meta stock chart analysis.
The stock struggled for much of July, falling to a three-month low of 442.65 on July 25. The slide came as the broader group of Magnificent Seven stocks struggled. The group — which includes Microsoft, Apple, Nvidia, Alphabet, Amazon and Tesla — shed more than $1 trillion in market cap over a five-day span last month.
Some investors rotated out of outperforming Big Tech stocks and into other markets as confidence increased about a rate cut.
August was better, with a 10% gain for Meta. A strong earnings report helped reverse the trend. Meta stock jumped 4.8% on Aug. 1, following a second-quarter report that beat expectations for sales and earnings.
The stock has rallied 58% so far this year.
Meta stock has a 95 Composite Rating out of a best-possible 99. The S&P 500 component also has a 92 Relative Strength Rating and a robust 96 EPS Rating.
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