Meta Platforms Inc. (META) , the company formerly known as Facebook, announced earnings after Wednesday's close. The results left the company perilously close to breaking a major support level and reaching a fresh two-year low.
The social media giant experienced its first quarterly decline in revenue since the company went public. Meta reported revenue of $28.82 billion in the second quarter, down from $29.07 billion in the year-ago period.
Using a monthly chart, we can view Meta's entire history since its initial public offering in May 2012. From its inception through Sept. 7 of last year, when the stock reached its all-time closing high of $382.18, Meta appeared to be on a perpetual incline. Since then, the stock has lost 56% of its value.
Source of charts: TradeStation
Meta's 50-month moving average (blue line) acted as support during steep declines in December 2018 and March 2020 (arrows). The stock fell beneath that indicator in February 2022 and has traded below it ever since.
Also on the monthly chart, Meta's MACD (moving average convergence divergence) indicator flashed a sell signal in December 2021 (shaded yellow). This was before the stock's decline began in earnest. At the time, Meta was still trading in the $300s.
Now that we've seen an overview of the stock's history, we have context for what lies ahead. This brings us to Meta's daily chart.
Here, we see a descending triangle pattern (dotted lines). That bearish formation projects Meta to the area near $135. Notice how the stock's 50-day moving average (blue) runs parallel to its bearish trend line, creating additional resistance.
The base of the triangle is located at $155, which is also Meta's lowest closing price so far this year. If that level should break, the stock will trade at a two-year low. Although Meta closed at $169 prior to the report, it fell to $161 in after-hours trading on Wednesday.
Based on the past 14 trading days, Meta trades in a daily range of $7.54. That puts the stock within striking distance of its key support level of $155.
Meta blamed the decline in revenue on weakening demand for digital advertising. "The situation seems worse than it did a quarter ago," said CEO Mark Zuckerberg, speaking on the earnings call.
With the Fed raising rates and the economy in question, I'm not looking for a quick turnaround in Meta's advertising sales. If you're looking to buy shares of Meta, patience may yield a better price.
