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I Nailed My Last Bearish Call on Meta. Have I Changed My Tune for Q2?

by | Jul 26, 2022

It’s time to take a look back at one of my greatest hits of 2022 so far, and a look ahead to what’s next after the company formerly known as Facebook reports second-quarter earnings.

Meta’s Q2 earnings report is coming Wednesday after the closing bell, and the former Wall Street darling has gotten crushed since peaking around $375 a share back in September 2021. 

Near the close Tuesday, shares of Meta Platforms Inc. (Nasdaq: META) were trading around $160, a near-60% decline in 10 months. 

A Meta stock chart (meta 2Q earnings report)

Back in late April, I appeared on Cheddar TV to discuss Facebook’s Q1 earnings. I mentioned I was not a buyer after the company reported better-than-expected numbers. Shares had risen to $205, but I was skeptical it would remain that high because of declining ad spend…

Days later, it fell to $177 — nailed it! And here we are, one quarter later with the company ready to report again while sitting at around $160. 

Once again, we’re looking at the same ad spend problem after Snap Inc. (NYSE: SNAP) sank all social media stocks with its earnings report this past Friday, knocking about 30% off the Snapchat parent’s market cap. 

A Snap stock chart (meta 2Q earnings report)

Big big social media and other tech stocks got hammered on the back of Snap’s earnings miss and latest warning of slowed ad revenue. But it might have been a little too much too fast because Snap is still more of a growth story compared to, say, Google parent Alphabet Inc. Class C (Nasdaq: GOOG), which is much more entrenched in the real economy.

Meta’s Q2 Earnings Report

And that brings us to Meta and its Q2 earnings report…

In this environment, unless you’re already so poorly viewed and down a ton, you have to beat by a wide margin to get a decent bump. 

If you miss by a lot and you already lowered guidance… like Snap back in April, well… you might fall another 30%. We also have the Federal Reserve’s interest rate and GDP news coming, inflation data — it’s almost too much data to consider.  

So what are my latest thoughts on Meta’s upcoming Q2 earnings report, and is the stock a buy now at these deeply discounted levels? 

Considering the company’s earnings-per-share expectations are projected to be down 38% year over year… no chance.

Here’s the deal… 

CEO Mark Zuckerberg is blowing a crap ton of money trying to get his virtual reality “metaverse” — hence the name “Meta” — off the ground. And that’s why the company’s EPS expectations are so bad. 

So aside from an even worse economic landscape than what we saw in late April, nothing has changed in my case against Meta ahead of this Q2 earnings report. 

Anything can happen, of course… But for me, this former high-flier and Wall Street darling isn’t a stock on sale right now… 

In fact, it could be another 30% falling knife.  

Are there any topics you’d like to see me cover or questions you’d like answered? Send me an email at jeff@joyofthetrade.com! And be sure to stay ahead of the markets by subscribing to our YouTube channel and our Instagram page for all of the latest!

P.S. Where’s Everyone Going?

We haven’t seen investors pull their money out of the market at a rate like this in years…

Meanwhile, the Federal Reserve is about to meet and let us know how much it plans to raise interest rates this week.

And while others panic, I’m prepping for some of the biggest overnight turnarounds we’ve ever seen…

And based on what the market internals and global economy are showing right now…

I believe we’re just at the beginning of a… 

Another Massive Overnight Opportunity!

WRITTEN BY<br>Jeff Zananiri

Jeff Zananiri

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