Meta Platforms, Inc. (META) Shows Volatility But Potential for Growth in AI Development

Introduction

Meta Platforms, Inc., traded under the ticker 'META', closed at $286.75 on August 24, 2023, marking a decrease of $7.49 or 2.55%. It traded between a low of $286.64 and a high of $299.46. The company, listed on the NASDAQ exchange, is currently valued at approximately $734.64 billion, with around 2.57 billion outstanding shares.

Volatility and Technical Analysis

On the last trading day, META's volume was 22.40 million, slightly below its average volume of 24.35 million. The company's average true range (ATR), a volatility indicator, was 3.24, suggesting moderate price fluctuations. The 14-day Relative Strength Index (RSI), another momentum oscillator, was 33, indicating that META currently sits in the 'neutral' zone, not entering either the overbought or oversold territory.

The Moving Average Convergence Divergence (MACD), a trend-following momentum indicator, is currently at -2.27 for the past three months, indicating some bearish momentum. It's worth noting that META is trading below its 50-day moving average of $297.80, but it's still significantly above its 200-day moving average of $208.49.

Meta Platforms encountered resistance at $288.73 while finding support at $283.25.

Fundamental Analysis

The company’s earnings per share (EPS) stands at $8.77, which considering the last closing price, translates to a price-to-earnings (PE) ratio of 32.55. While this PE ratio is high compared to the average of the S&P 500 (around 20), it's not uncommon for tech stocks to have higher PE ratios.

Despite facing constraints due to regulatory pressure in EU and compensations to users for data misuses, Meta seems poised for growth. It's leveraging artificial intelligence (AI) in its developments, as shown by its recent announcement about a free AI chatbot for writing computer code, and there's good reason to believe that AI will play a significant role in driving future growth.

Analytic Predictions

The discounted cash flow (DCF) model suggests a projected stock value of $290.93, which is slightly higher than the last closing price. The current consensus among analysts is a 'Buy' rating, with 36 suggesting 'Buy', 8 advising 'Hold', and only 1 recommending 'Sell'.

However, Wall Street's sentiment is quite wide, with a lower target price of $105 and a high target of $466. The median$225 and the consensus target price stand at $248.23. This reveals mixed views about META stock's future performance.

News Influence

Potential future catalysts for the stock could be in the pipeline, with recent news hinting at imminent AI announcements from major tech firms, including Meta. Furthermore, the launch of Meta's AI tool designed for writing computer code signifies their ongoing commitment to AI and can be a positive growth momentum.

However, it's important to consider that intense regulatory scrutiny for big tech companies, particularly in Europe, and looming compensations can create a challenging business environment. BoFA's prediction of "trouble" for tech stocks can also be a concerning signal for potential investors.

Conclusion

In conclusion, although there's a degree of uncertainty around regulatory factors and compensation payments, META’s commitment to AI development and growth could still offer positive returns in the long run. Short-term investors might want to wait until the trend positively reverses to avoid potential losses, so it could be considered a 'Hold' for now.

Long-term investors, however, might see the current price as a potential entry point, specific to their risk-reward appetite and considering the significant high target price predicted by some analysts. Thus, for them, the stock could be a 'Buy'. But caution should be exercised, given the wide range of target price predictions and the high PE ratio.

The actual call: 'Hold' or 'Buy', would depend on the individual investor's investment horizon and their perception of the associated risks.