Meta Platforms is the IBD Stock of the Day as the Facebook parent is testing the 50-day and 21-day exponential moving average. Meta stock hit a daily high of 303.30 earlier Wednesday that would offer an early entry point.
On the strength of an improving advertising business, a push into artificial intelligence products and cost-cutting measures, Meta stock has surged nearly 150% thus far in 2023. That comes after a rough 2022 in which Meta shares lost 64% of their value.
META stock edged down marginally to close at 299.17 on the stock market today. The action has shares headed toward the formation of a base, with a 326.20 buy point. Further, Meta stock is on IBD Leaderboard.
Meta's Year Of Efficiency
Earlier this year, Chief Executive Mark Zuckerberg committed to a "Year of Efficiency" at Meta that included cutting 11,000 jobs in February. The company is turning to artificial intelligence to help an advertising business that was badly wounded by privacy policy updates from Apple.
As a result, Meta stock hit a 52-week high at 326.20 on July 27, the day after a beat-and-raise earnings report showed the company's second-quarter revenue rose 11% year-over-year to $31.08 billion. The company's earnings per share of $2.98 topped analyst estimates of $2.91.
Since then, shares have pulled back, dipping just below their 50-day and 10-week moving averages. Now the stock is rising — and flirting with those averages once again.
Zuckerberg highlighted improving monetization for Meta's Reels short-form videos product and growing user counts across its family of apps. The company projected revenue for the current quarter of $33.25 billion at the midpoint of its range, topping Wall Street's prediction of $31.22 billion.
"The Year of Efficiency was always about two different goals: becoming an even stronger technology company and improving our financial results so we can invest aggressively in our ambitious long-term roadmap," Zuckerberg said on the company's earnings call.
META Stock: Company Pushes Further Into AI
Also, Meta has adapted to changes from a big tech rival. In the spring of 2021, Apple began requiring apps downloaded onto its phones to let users opt in or out of tracking their activity across third-party sites. As users opted out, Meta lost valuable data it uses to personalize ads.
In February 2022, Meta said Apple's privacy change would cost the company $10 billion that year alone.
Now, Meta is using artificial intelligence tools to help advertisers reach customers. In August 2022, Meta launched a series of ad automation tools for businesses called Advantage+.
One year later, Zuckerberg told analysts on the July 26 earnings call that "almost all our advertisers are using at least one of our AI-driven products."
META Stock Gains Analyst Support
Further, the results have won over analysts. According to FactSet, 88% of the 58 analysts covering Meta give the stock a buy or overweight rating. That's the highest since the start of 2021.
In a coverage initiation report on Meta, Wedbush analyst Scott Devitt gave Meta stock an outperform rating and 350 target price.
"With adoption across its Advantage+ product suite rising and monetization improving in newer mediums including Reels ($10B+ run rate) and click-to-message ads ($10B+ run rate) we believe Meta is well positioned against an improving backdrop for digital advertising that should support accelerating revenue growth in 2H23 and into 2024," Devitt wrote in the Aug. 21 note to clients.
But investors are closely watching Meta's spending on Reality Labs, the company's division focused on metaverse products. Reality Labs had an operating loss of $3.7 billion last quarter and the company projects operating losses from the division to increase year-over-year for 2023.
Analysts have pushed back on Meta's metaverse spending in the past. To that point, Zuckerberg said on the company's second-quarter earnings call that "this is a very long-term bet."
Technical Ratings
Meanwhile, Meta shares boast a best-possible IBD Composite Rating of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one. The best growth stocks have a Composite Rating of 90 or better.
Further, Meta's Relative Strength Rating is 98 out a best-possible 99. The rating measures how a stock's price movement over the last 52 weeks compares with that of other stocks in IBD's database
Meta stock has an Accumulation/Distribution Rating of B+. The rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling
