The last time we talked about Facebook, the stock had just plunged 26% overnight following a very disappointing earnings report.
But a lot more has happened since then…
Ever since a whistleblower released internal company memos showing how the platform causes mental harm to children last year, the company has been busy rebranding itself.
As expected, the company officially changed its name and ticker symbol to Meta Platforms, Inc. (META) this month.
But it also recently announced that it is teaming up with NVIDIA Corp. (NVDA), Adobe Inc. (ADBE), Microsoft Corp. (MSFT) and several other companies to form what they’re calling “The Metaverse Standards Forum.”
I’ve said before that CEO Mark Zuckerberg’s intention is to own and operate the “metaverse,” and he’s setting up META to do just that.
However, that doesn’t mean the stock is a buy by any means…
While the announcement of The Metaverse Standards Forum claimed that the group is supposed to “foster the development of open standards for the metaverse,” I think something else is going on here…
This new “forum” is really just about Meta’s version of the metaverse.
The companies included in the forum are, for the most part, component manufacturers and companies that will make games and other small pieces that fit inside Meta’s overall ecosystem.
They are bait fish looking to pick up scraps off the whale that is Meta Platforms.
Notably, Alphabet Inc. (GOOGL) and Apple Inc. (AAPL) were not included among the forum’s participants.
Why? Well, Alphabet and Apple are the other big-tech whales swimming in the metaverse ocean.
They’ll build their own worlds or come at it from another angle. They won’t be part of Zuckerberg’s vision, at least in a direct way.
And I think Zuckerberg knows this and is clearly trying to get out early to do whatever he can to establish himself as the “overlord” of the metaverse.
I’ve said before that the metaverse could represent a $30 trillion industry in the making.
There will be massive opportunities to capitalize on this emerging megatrend when the time is right.
But right now, Wall Street just doesn’t seem to care.
Not only did the stock fail to recover from its dramatic decline in February, but it has fallen to much lower lows since then.
From the day of the earnings miss in February to the day before the next report, April 27, the stock dropped another 28%.
The bulls got a positive surprise from the April report, which boosted the stock almost 18% the next day.
However, it didn’t take long for that gain to evaporate as well, as META is down another 23% since then.
As you can see in the daily chart above, the stock has been riding its 50-day moving average (red line) lower all year.
The company has lost a whopping 53% of its value this year alone, and it is down a total of 59% from the all-time high.
From a weekly chart perspective, however, the stock is coming up on a few areas of potential support…
In the chart above, I’ve drawn two potential support levels based on the price history.
The first level stems from the level of the March 2018 low around $149, and the second level is based on the low from December 2018 near $123.
I know it is tempting to look at these levels and want to pick up a bargain. After all, if the stock can just get back to its all-time highs, that would represent a gain of over 140%.
But buying META stock here would be like trying to catch a falling knife!
The stock just made a new 52-week low yesterday, so it’s way too early to make any kind of call on the stock.
However, I am still keeping an eye on my metaverse stock watchlist.
And when this market finally stabilizes and sets up a nice base, I think we’ll see some of the greatest investment opportunities of our lifetime begin to develop.
So stay tuned…
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