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Key Takeaways
- Shares in Meta Platforms jumped in extended trading on Wednesday after the social media giant’s quarterly results topped Wall Street’s estimates, giving investors confidence that the company’s significant investment in AI is reaping benefits.
- Meta shares have remained in a trading range since the stock’s earnings-driven breakaway gap in February.
- Post-earnings buying could see the share price test key overhead chart resistance levels at $490 and $530.
- The measuring principle, which calculates the distance in points between the trading range’s two trendlines and adds that amount to its top trendline. projects a price target of $640.
Shares in Meta Platforms (META) jumped more than 7% in extended trading on Wednesday after the social media giant’s second-quarter earnings and sales topped Wall Street’s estimates, giving investors confidence that the company’s significant investment in artificial intelligence (AI) infrastructure is reaping benefits.
The tech behemoth’s stock price has fluctuated significantly after recent quarterly reports. In February, the shares surged more than 20% on Q4 results amid the declaration of the company’s first ever dividend, while light second-quarter revenue guidance sparked a drop of over 10% following Q1 earnings in April.
Below, we take a closer look at Meta’s chart and use technical analysis to identify key levels to watch out for.
Shares Remain Rangebound
Since the stock’s earnings-driven breakaway gap in early February, the price has remained in a trading range, fluctuating several times above and below the 50-day moving average (MA), indicating a lack of clear direction.
A move to a new all-time high (ATH) above the rangebound period in July was short lived, with the shares retracing to the lower portion of the range leading into the social media giant’s quarterly results.
Monitor These Two Key Price Levels Post Earnings
Looking ahead, investors should monitor two key levels that the stock could test amid a post-earnings pop.
The first sits around $490, a location on the chart near the 50-day MA where sellers may look to book profits near a horizontal line that links several minor peaks and troughs that have formed throughout the rangebound period. Although after-hours trading indicates an open higher than this level, it’s worth watching if the shares can hold above this area through Thursday’s close.
Follow-through buying could see a retest of $530, where the price would likely encounter significant overhead resistance around the April and July swing highs, Until the price decisively breaks out above these two peaks, the later which marks the stock’s record high, there’s the ongoing possibility of a double top.
Breakout Target
If the Meta shares go on to break out above the trading range, investors can use the measuring principle, sometimes called a measured move, to project a potential price target.
To do this, we calculate the distance between the range’s two trendlines in points and add that amount to its top trendline. In this case, we add $110 to $530, which forecasts a price target of $640.
Meta shares rose 7.2% to $508.87 in after-hours trading Wednesday.
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