Don’t click the “buy” button yet! Meta Platforms (META) may look appetizing to some dip-buyers after Wednesday’s earnings massacre, but even a quick glance at the daily chart tells us that the downside to the META from here offers more opportunities.
Mark Zuckerberg’s company, which owns Facebook, Instagram and WhatsApp, on Wednesday extravagantly missed GAAP earnings per share (EPS) for the third quarter of 2025. Meta posted GAAP EPS of $1.05, a whopping 84% below Wall Street’s $6.71 consensus. The shortfall is almost entirely due to a one-time tax charge of nearly $16 billion caused by the Trump administration’s One Big Beautiful Bill Act passed earlier this year.
That allowed META stock to fall more than 11% on Thursday, and Friday has seen new lows.
Meta Platform’s stock news
Many retail investors know that buying Mag 7 stock after big down swings always seems to work out in the end. And in that sense we agree. There are a number of reasons to strongly believe in Meta’s return to new heights.
First, while causing an unexpected setback in Meta’s share price, the government’s tax bill will significantly reduce taxes over the long term. In fact, Meta’s chief executive believes that the lower tax rates will increase earnings already in the 4th quarter.
Then there is the adjusted earnings. Stripping out the one-time tax charge, adjusted EPS came in at $7.25, a full $0.58 ahead of analyst consensus. That means adjusted earnings, the number most investors focus on over the long term, rose 20% year-over-year.
Ad impressions delivered across the Family of Apps segment increased 14% year-over-year in Q3, while average cost per ad increased by 10% year on year. This tells us that pricing power and demand remain robust, while Zuckerberg said Facebook Reels has reached a run rate of $50 billion a year. The company’s prized holding doesn’t appear to be slowing down.
If there’s anything troubling the market, it’s likely the intense level of capex going into Meta’s AI investments. The already heady $69 billion mid-range estimate for 2025 was pushed up during the earnings call by another $2 billion. Like the company’s Reality Labs spinoff, which lost another $4 billion during Q3 as it had in the previous five quarters, the AI ​​investments are likely years away from turning a profit, if at all.
With the metaverse investments losing $73 billion cumulatively so far, investors could be forgiven for thinking that the heavy investment in AI data centers is just another boondoggle requiring an eventual write-down. News broke Friday that Meta is looking to raise $30 billion in a bond sale to sustain the AI ​​buildout, a sign that the price tag for this venture is steep.
Meta Platform’s stock forecast
The daily chart is pretty self-explanatory. While nubile traders may be enticed by the prospect of a quick return to the $700s, a more experienced professional sees two notable gaps to fill.
First comes the gap on May 12, leaving a gap between $611 and $619. Markets love to close gaps and to do that META needs to trade about 6% lower to reach $611.
The second hole also dates from May, the first day of the month to be exact. That difference from $558.50 to $570.50 would require META to mark the lower number by shedding another 14% from Friday’s close of $649.50.
META daily stock chart
But not to be left out, bulls then have the higher gap to close as well. The gap created by Wednesday’s earnings crash requires META to trade candle by candle from $680 to $742.50, which may take some time. It would be fun if META could close the bottom two gaps before they close the top gap. It would be a wild ride for sure.