Meta Platforms stock is down for a second straight day Friday. Shares for the Facebook parent company were hit by a broader megacap tech sell-off. Plus, an analyst report flagged concerns about the company's digital ad sales.
Meta stock fell more than 2% to 500.50 on the stock market today. Shares have lost about 6% since market close Wednesday. After rallying by 7% last week to reach record highs, Meta is on pace to lose those gains this week, according to its MarketSurge weekly stock chart.
Earlier Friday, a report from Edgewater Research cautioned there are "ongoing " elements of weakness" in the company's ad performance, according to a Seeking Alpha report Checks with ad contacts showed weaker-than-expected conversions in June and early July, the report said.
Other social media stocks were also down Friday. Pinterest stock is down 2.3% at 41.13. Shares of Snapchat parent Snap were off a half-percent at 16.26 in recent action.
Meta Stock: Top Performer In Since Late 2022
Top-performers like Meta and Nvidia also slumped Thursday after better-than-expected inflation news prompted some investors to broaden their bets. Small and mid-cap stocks outperformed large caps Thursday.
"In addition to the Magnificent 7 companies, semiconductor and social media companies have been among the biggest underperformers in recent days, reflecting the rotation to more underperforming value-oriented companies," Angelo Zino, senior equity analyst at CFRA Research, told IBD in an email.
Other than Nvidia, Zino noted that Meta has been the best performing megacap stock since October 2022 lows. Meanwhile, the communications services and information technology stock groups have been the biggest outperformers among industry groups.
"While some profit taking should be expected, we think fundamentals within both sectors remain healthy and should see above-market earnings growth through the end of 2025," Zino added.
Zino on Tuesday published a client note that reiterated a buy rating for Meta and upped CFRA's price target for the stock to 600, from 540.
"Despite tougher (revenue) comparisons in the second half (Meta grew 23% and 25% in Q3 and Q4 of last year), we believe digital ad trends remain healthy and note greater AI integration is supporting higher engagement," Zino told clients.
Meta's Upcoming Earnings
Meta is scheduled to report second quarter earnings on July 31. Shares fell sharply following Meta's first quarter report in late April. Investors fretted over growing spending on Mark Zuckerberg's AI ambitions.
But shares bounced back over the next several week, reaching a record high of 539.91 on Friday, July 5. Shares reached another high of 542.81 on Monday.
On June 27, shares broke out from a cup-with-handle base from a 514.01 buy point, according to the MarketSurge pattern recognition tool. Meta stock's Relative Strength line has improved as well, reaching 95 out of a best-possible 99.
Meanwhile, Meta stock is on the IBD Leaderboard premium stock list. It also an IBD Tech Leader.
