Meta Platforms’ ‘year of efficiency’ was also a year for the history books. The stock was a top performer in 2023 and is starting 2024 on a tear, as well. On top of the 194% gain achieved last year, the company’s market cap shot another 20% higher after the opening bell today following its stellar Q4 earnings report. Meta ‘s ad revenue surged 24% YoY, while net income tripled as headcount fell.
Long story short, it is not difficult to be bullish on Meta stock now in early-2024. That wasn’t the case in mid-2022, though. When we last wrote about it in, on June 23rd, 2022, the stock was trading near $156 a share, down almost 60% in less than a year. After such a precipitous fall, most investors are either waiting to see how how much further will the price drop, or outright declaring the company a lost cause. Elliott Wave analysis, on the other hand, suggested that while the exact bottom was impossible to predict in advance, it must be near. The chart below, published in that June-2022 article, explains how.
Meta ‘s weekly chart allowed us to take into account the company’s entire history as a public entity. It revealed a textbook impulse pattern, labeled (1)-though-(5) in wave I, which ended in July of 2018. The rest of the price development looked like a very unusual (a)-(b)-(c) flat correction. Unusual, due to the fact that wave (a) was itself a running flat and wave (b) was abnormally extended.
Nevertheless, both of these two waves had three-wave structures, implying that wave II was indeed still in progress. This meant that the sharp selloff from $384 was most likely the final wave (c) of II. According to the Elliott Wave theory, once a correction is over, the preceding trend resumes. So instead of throwing in the towel, investors should’ve been preparing for the imminent bullish reversal.
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The bears fought a good fight and even managed to drag Meta stock into double digit territory near $88 a share. Catching the bottom was, of course, impossible, except by luck. It was also not necessary. Even if measured from the $156 a share at the time of writing in June, 2022, the price has since surged by over 200%. Not that anyone, us included, knew it would climb so high so fast. What matters is that Elliott Wave analysis helped us turn bullish even before Mark Zuckerberg announced his year of efficiency twelve months ago. Perhaps a bit too early, actually.
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