Meta Platforms, formerly Facebook, needs no introduction. It is the biggest social media company in the world with over 3.6 billion users on its family of platforms. This means nearly half the people on the planet are using some of Meta ‘s services. No wonder the company is one of the most profitable businesses that have ever existed.
Unfortunately for its shareholders, however, Meta stock is down almost 60% in less than a year. The price reached an all-time high of $384.33 on September 1st, 2021. Yesterday, it fell below $156 a share. Apparently, Apple’s new privacy rules coupled with Meta ‘s huge spending on its Metaverse project scared many investors away.
Meta Looks Great Both Technically and Fundamentally
In the meantime, the company is still extremely profitable, financially sound and the leader in its field. From a valuation standpoint, the stock is cheap as well, trading at just 13 times forward earnings. A conservative discounted cash flows calculation easily arrives at a fair value for the stock higher than $200 a share. So is this a good time to buy some Meta shares? Let’s see what the Elliott Wave principle would suggest.
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Apart from the textbook five-wave impulse between the 2012 low at $17.55 and the 2018 high at $218.62, this is not a pattern one sees every day. It turns out Meta stock has been in a correction since July, 2018. Wave I can be labeled (1)-through-(5), where the five sub-waves of (1) and (3) are also visible. The rest seems to depict a messy (a)-(b)-(c) flat correction, whose wave (a) is a running flat itself.
Wave (b), which travelled from $137.10 to $384.33, is an abnormally large a-b-c zigzag with a triangle in wave ‘b’. This means the current crash must be an impulse pattern in wave (c). And indeed, it can be labeled 1-2-3-4-5, whose third wave is marked i-ii-iii-iv-v. If this count is correct, wave (c) is almost complete. Once it is over, a major bullish reversal can be expected to mark the beginning of a new long-lasting uptrend.
Still Plenty of Reasons to Avoid Meta Stock, Though
So it turns out fundamental and Elliott Wave analyses both point north for Meta stock. We still have no plans to add it to The EWM Interactive Stock Portfolio, though. The reason has nothing to do with the above analysis. We simply don’t see Meta as a positive force in the world. Of course, there are the obvious benefits that attracted over 3.6 billion people to its platforms.
Unfortunately, Meta is also responsible for creating addiction to its services as well as allowing the spread of dangerous fake news on its platforms. While the former is ruining people’s lives in very subtle ways, the latter enabled dictators like Vladimir Putin to spread propaganda and split societies in democratic countries across the globe. And let’s not forget the Rohingya Muslims genocide in Myanmar, survivors of which are now suing Meta for $150 billion for amplifying hate speech against their minority.
What’s worse is that the Cambridge Analytica scandal, among others, showed Mark Zuckerberg’s complete disregard for the harm his company is doing. There are plenty of stocks that would make money for investors without also giving them a guilty conscience. To us, Meta isn’t one of them. There are things more important than money.
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