Tech Stocks: Meta (FB Stock) Earnings Preview: Will Facebook do it again or will it save the tech space?
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- Meta (FB) stock is set to report earnings after the close on Wednesday.
- Last time out saw Facebook stock suffer a record market cap fall.
- Alphabet (GOOGL) and Microsoft (MSFT) started tech earnings on Tuesday.
After last evening's contrasting earnings reports from Google and Microsoft it is time for the formerly known as Facebook now-called Meta (FB) to try and reassure nervous tech investors. That tension has been growing of late as we can see from the chart below showing Nasdaq volatility (VXN) at its highest since January 2021.
VXN chart, daily
Meta (FB) stock news: An opportunity for an upside surprise
Ok, so we're now all no doubt familiar with what happened last time out for Facebook earnings. That has set the bar pretty low (a record fall tends to do that) and so we feel the risk-reward is skewed to the upside. We are not saying earnings will be good or FB stock will go up but merely that another weak set of numbers will likely be met with a chorus of more of the same.
By contrast, if Meta somehow does turn things around it could see a sharp rally. Now, what is the market looking for from Facebook earnings? Earnings per share (EPS) is forecast for $2.51 while revenue is forecast at $28.2 billion. Facebook is sitting at the low post the February earnings so the stock is pretty beaten up and the sentiment is low, hence the reason for our risk-reward skew to an upside earnings surprise. Wall Street analysts have also set the bar pretty low after the last quarter.
Meta (FB) stock forecast
The pandemic lows from March 2020 are now firmly in sight at $137.10. Huge support there, but on the weekly chart both the MFI and RSI are oversold so giving further credence to our risk-reward thesis.
Meta (FB) stock daily chart
The big concern last quarter was the fall-off in advertising revenue. Apple's privacy changes hit the stock and revenue hard so it will be interesting to see how Facebook is managing this. Alphabet (GOOGL) alluded to advertising in its earnings conference call last night but in fact, Google revenues held up reasonably well. YouTube may have seen a slowdown due to the Russia-Ukraine war so can Facebook avoid a similar slowdown? But after the last set of earnings analysts appear to have set the bar much lower as mentioned. Facebook earnings growth forecasts are over 20% lower than previously and revenue is penciled in for just 8% growth.
Facebook earnings are out after the close on Wednesday.
