In our previous article about Meta Platforms, we showed readers how back in June, 2022, Elliott Wave analysis put us ahead of the stock’s 2023 surge. Despite its recent post-Q1 earnings drop, the share price is up by another 34% in 2024 so far and seems on track for a repeat of last year’s outperformance. However, we think that extrapolating the recent past into the distant future is a dangerous game.
When Meta was trading above $380 a share in September, 2021, hardly anyone expected it to lose nearly four-fifths of its market value over the following 14 months. Alas, that’s precisely what happened. The same way, people now forget that a notable drop is even possible with the stock not far from its records. But possible it is. And according to the chart below, it is fast approaching.
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The daily chart of Meta Platforms stock reveals that its phenomenal surge from under $90 has taken the shape of an almost complete impulse pattern. We’ve labeled it (1)-(2)-(3)-(4)-(5), where the five sub-waves of (1) and (3) are also visible. Wave (2) was a running flat sideways correction, while wave (4), observing the guideline of alternation, was a sharp pullback.
If this count is correct, wave (5) should make a new all-time high in the vicinity of $600 a share soon. The crowd is likely to be most bullish then. Unfortunately, at that point the stock would offer the least attractive risk/reward ratio. According to the Elliott Wave theory, a three-wave correction follows every impulse. In Meta ‘s case, a decline to the support near $300 a share would make sense.
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