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On Friday, META’s stock price fell by 1.5%, trading at $434.06. The decline followed a troubling announcement from CEO Mark Zuckerberg on Thursday. He revealed that the company plans to increase spending on AI research and development, which could indicate slower growth in the near term.
This news came right after META’s Q1 2024 earnings report, which surprisingly exceeded expectations. The company reported revenue of $36.46 billion, surpassing the forecast of $36.16 billion. Earnings per share were $4.71, beating the predicted $4.32. However, investors were disappointed by the company’s future revenue forecast of $36.5-$39 billion, with a midpoint of $37.75 billion, which falls short of the consensus estimate of $38.3 billion.
A major concern for investors is the uncertainty around the AI project’s potential returns. META’s previous investment in the metaverse led to significant losses, and there’s skepticism about whether the AI venture will be profitable anytime soon. Zuckerberg has indicated that the benefits of AI might not be realized for several years, making some investors wary of committing to long-term, experimental projects.
Despite these concerns, META has a strong track record of innovation, which could be its strength during the current market downturn.
Currently, the stock faces downward pressure, as the RSI suggests that sellers are in control. If the price remains below the pivot of $431.08, it could continue to drop, potentially testing levels around $421.02 and $410.53. Conversely, if the price rises above $431.08, it could shift momentum towards the resistance level of $447.26. If bullish momentum continues beyond this point, the stock might break through resistance and approach $460.38.