Meta Platforms is the IBD Stock of the Day for Friday. Shares of the Facebook parent company are chasing a 602.95 flat-base buy point but could also be actionable as they move above Meta's 50-day line.
Meta stock rose 0.9% to close at 574.32 on the stock market Friday. The stock hit a record high at 602.95 on Oct. 7 but have pulled back in the weeks since.
Overall, shares have gained 61% this year, helped by strong growth from Meta's massive digital advertising business and optimism about Chief Executive Mark Zuckerberg's AI investments. Revenue grew by more than 20% for the Facebook and Instagram owner for four straight quarters before easing back to 19% in its most recent third-quarter report against tougher comparisons.
There are challenges ahead for the Magnificent Seven stock. Investors are uneasy about how much the social media giant will need to spend on its AI vision. And lawmakers worldwide are scrutinizing the effects of social media on young users, underscored by Australia approving a ban on social media for users under age 16 Thursday.
Meta Shares Tread Water In Q4
Despite its big gains year to date, Meta stock has been flat since October. The Zuckerberg-led company saw its stock fall slightly following third-quarter earnings in late October. Shares also fell slightly the day after Donald Trump's election to a second presidential term, despite the broader market rallying on the news.
For the earnings report, Meta's results beat expectations for both earnings and revenue. But investors fretted as Meta again upped its estimates for capital expenditures, as the company spends big on chips from Nvidia and other costs to build computing capacity for AI.
Zuckerberg has told investors the company's spending can pay off through increased engagement on its platforms and new ad products for businesses. The social media giant recently hired former Salesforce AI leader Clara Shih to lead a new business AI group.
And following Donald Trump's election win, investors may have been concerned about tensions between Zuckerberg and Trump, who was suspended from posting on Facebook and Instagram for two years following the 2021 riots at the U.S. Capitol. Zuckerberg appears to be trying to patch things up. The Facebook founder visited Trump in Florida on Wednesday, according to the New York Times.
Still, there are other regulatory concerns to watch for Meta. Lawmakers in Australia on Thursday approved a ban on social media for users under 16 years old. A Meta spokesperson told Reuters that the bill appeared rushed and there should be a "productive consultation" for how the rules are enforced. The bill highlights growing focus on the effects of social media on young users. U.S. Surgeon General Vivek Murthy wrote in a June New York Times op-ed that social media should come with a warning label for young users.
After Market's Best Week In Year, 3 Titans Eye Buy Points
Meta Stock In Flat Base
Still, the markets appeared to brush off concerns about the Australia law. Meta stock opened ahead as U.S. markets resumed trading following Thanksgiving.
Shares are in an eight-week-long flat base. Meta stock is roughly 5% below the 602.95 buy point in Friday's shortened trading day. A move above that entry point would put Meta back into record-high territory.
But Meta overtook its 50-day moving average on Friday, making the stock actionable for more-aggressive investors.
Meta's Relative Strength Rating is at 82 out of 99, meaning it has outperformed 82% of stocks tracked by IBD based on price performance. That's fallen slightly from an RS score of 92 last month.
Meanwhile. Meta shows a 95 out of a perfect 99 IBD Composite Rating, per the IBD Stock Checkup. It is the third-highest-rated stock out of 69 members in the internet content group tracked by IBD.
