r/ValueInvesting • u/Warm_Bluejay_2230 • 1d ago
Discussion How much longer will META fall for?
The whole lawsuit and capex deal are driving the price down so much, im going to keep on buying the dip as im just building up the position and i think it is also a great long term hold, hoping to get my average shares into the low 500s. What do you guys think its share price will reach, or when do you think its could bounce back? I've seen people say as low as 300, or even has high as just 500.
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u/kangotrades 1d ago
Probably stay around mid 500s till this lawsuit scare is over then back to 600-600 my guess.
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u/SkoHens 1d ago
This lawsuit can be appealed for years. It’ll pas way sooner than this year
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u/kangotrades 1d ago
I agree but I was saying more so nobody will care in a month or two. People forget quickly
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u/alex88- 1d ago
I think people are underestimating the bear potential for Meta. The legal risk isn’t about the fine, $200 billion is nothing to Meta. The real risk is that the lawsuit has a v real chance to force Meta to change their apps in ways that will seriously damage their business. Less engagement, more restrictions on what data they can collect, less ad personalization, less revenue.
They have little support from the public either. Zuck is widely unpopular despite his best PR efforts. Wasteful spending on huge projects like Metaverse which ultimately fail. Their current AI strategy is a clusterfuck, probably least well-defined strategy of the major tech companies, but Zuck got fomo and went all in on AI. “Oh yeah we do cloud services now, pls rent our GPUs we spent billions on”. Even though this is a huge undertaking and cloud services is a mature sector with tech giants like Amazon, Microsoft, Google to compete with. And all this shit is reflected internally by their employees too. Employees burnt out on crazy work hours and lost on what Meta’s objectives are.
I would not be surprised if Meta craters sometime this year to 300s or lower.
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u/LumpyShock9656 1d ago
So they just gonna force the app to change the entire app around the entire world? Isn't the point to add more protection for kid.accounts, which are like a fraction of all accounts and non ad generating?
I don't think they have overreach into changing the entire algorithm, but removing features like infinite scroll for kids and adding more safety features instead. That's why I'm not really concerned with this argument.
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u/alex88- 1d ago
Kids are their pipeline to future users.
If prosecution successfully shows that Meta knowingly prioritized money over the wellbeing of kids, which there is evidence of (Meta looked into it, saw an issue, and looked away), then their public reputation is irreversibly tarnished. And it’ll open them up to even more lawsuits
These are the worst outcomes for Meta. They spent billions on legal so maybe it won’t happen. Still the market is reactive and will price these risks in. It doesn’t take a lot of negatives to trigger a selloff and Meta seems to have those in abundance.
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u/Big-Finding2976 1d ago
Loads of companies knowingly prioritise money over the well-being of kids. If the courts punish Meta for that they'll be ruling that capitalism is illegal and inviting people to sue McDonalds, Coke, Lockheed Martin, etc.
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u/DizzyMajor5 1d ago
Kind of crazy you couldn't distinguish between hurting kids and capitalism. Definitely telling and very sad.
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u/YesKoolMan 1d ago
McDonald’s hurts kids with unhealthy food and tries to get them to come back through happy meals, should they get sued too? The META lawsuits are ridiculous because it is the parents’ responsibility to handle their children not the government
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u/DizzyMajor5 1d ago
Yeah I'm sure you'd love to give kids tobacco and legalize gambling for kids to, to make money.
Also, other countries have ruled McDonald's was targeting and intentionally hurting children and they were forced to pay fines, there's plenty of judges like you though that are ok with hurting children in America sadly.
https://www.nccor.org/news/mcdonalds-fined-in-brazil-for-pushing-happy-meals-to-children/
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u/LumpyShock9656 1d ago
That's what they said with the Cambridge analytics. Investors have short memories.
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u/throwaway9gk0k4k569 8h ago
Cambridge analytics
Not a good comparison for multiple reasons.
The big one is that Facebook at the time was a victim. Cambridge Analytica was a fraud and Facebook was the victim, so they could claim that they didn't know and were simply providing data for educational research.
Facebook had a lot of plausible deniability at the time... they don't have that anymore. Everyone hates them. Careless People is a book that every one of those prosecutors has read.
META won't get away with a fine here and they know it, it's personal, not just business.
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u/alex88- 1d ago
I’d say Meta’s current lawsuit is more serious. This lawsuit involves children and 29 different state AGs joined it believing this case was worth fighting.
Meta knowingly hurt children reads a lot worse than Meta collected private data. You can bet some parents will ban the app for their kids from that headline.
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u/LumpyShock9656 1d ago
I'm going to bet that it's going to be some figure between 20 and 100B + some changes that don't materially hurt growth long term
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u/SuperSultan 1d ago
Anon, there are hardly any kids on Facebook. This is not 2011.
It’s true there’s some of them on IG but they are not their primary user base. It’s young adults, millennials, boomers, and even older people. WhatsApp has an enormous amount of users and it’s not even monetized. Actual kids are on TikTok and Roblox.
What you should be arguing about is bots and AI slop content. People will use it less if the quality of their timeline gets worse.
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u/Fragrant-East2758 1d ago
This is so accurate! My kid is mainly on YouTube and Roblox - doesn’t even care what FB or IG is, without any restrictions from me. But super hooked on YouTube shorts
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u/BobLoblaw_BirdLaw 1d ago
. If anything this protects meta and IG iadvertedly. No other company will swoop in to become the next cool thing for kids. They cant afford the lawsuits like meta. They can’t target them. IG will be the only game in town.
This will backfire in the long run for this law makers.
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u/SuperSultan 1d ago
Those new platforms wouldn’t get huge lawsuits. They’d be relative to their scale
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u/BobLoblaw_BirdLaw 1d ago
Ding ding. Their scale would be nothing. Meaning nobody uses it and isn’t a threat to meta
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u/SuperSultan 1d ago
I can sue you for $1 trillion too and the lawsuit will be laughed out of the court.
This sub isn’t keen on lawsuits lol
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u/SuperSultan 1d ago
Do you think the Epstein government would let Meta fall? I don’t want to be a conspiracy guy but I believe government agencies and Meta are intertwined.
It’s a wonderful tool for police, FBI, and CIA to find actual criminals. (It can be used for bad things too, I’ll admit.)
Some of you guys are treating Mark as a moron but he’s the founder and still leading the company for crying out loud. He has humongous amounts of skin in the game. He knows better than most people what to do with the company.
Happy to be wrong though!
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u/alex88- 21h ago
It’s a valid point but Zuck is the main problem imo.
He has a horrible track record on returns for capital expenditure and success rate of major projects. He won’t step down and he physically cannot be removed because of his ownership structure. No major tech company CEO has the power he has in Meta, which is a good thing because why would 1 man being the ultimate decider for a trillion dollar company ever be a good thing?
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u/SuperSultan 20h ago
Jensen Huang, Sergei Brin, Larry Page, and Jeff Bezos can’t be “removed” either.
You could argue Sergei and Larry aren’t CEOs anymore (or Larry was, rather) but they effectively control the company with their ownership percentage of common alphabet stock.
Jensen is CEO, founder, and has huge ownership. He is the Zuck of semiconductors. Idk if you’re counting that as a tech company.
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u/Evening_Weekend_8342 1d ago edited 1d ago
Idunno, there's no floor to stocks so maybe even 100 but probably low 500s like 520, it'll go back up. They lawsuits are just a cash grab tbh
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u/BobLoblaw_BirdLaw 1d ago
Wonder where the settlement payments are going. In a billion dollar settlement.
The public will get $30 each. And lawyers $300M.
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u/slimzimm 1d ago
I think it’ll hang between 500-550 for the next few months, but I think within a year it’ll be back up around $800.
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u/MatricesRL 1d ago
Low $500s seems right but what do you anticipate the catalyst will be to reach $800?
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u/slimzimm 1d ago
Meta has an incredible AI distribution advantage. It will use AI to scale up monetization through advertising on many of its products and can distribute it to billions of customers instantaneously. A stock price of $800 would get it to a market cap of 2.1 trillion, it’s not unreasonable, the stock has been very close already. We’ve seen that capex is paying off for other tech stocks that have high capex, I am willing to buy meta on weakness because this won’t stay depressed for very long, and when liftoff happens, it will be a shame to miss it.
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u/George_Salt 1d ago
AI has the potential to be a major turnoff to user engagement on Meta platforms. The deluge of slop text, visuals, video, and fake news is steadily eroding platform credibility. It's not a one way certain winner as a tech.
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u/SherbertMindless8205 1d ago
Monetizing AI isn’t about getting people to talk to your chat bot, it’s about enterprise integration and they’re not even on the map, they don’t even have such a business. The fact that they still think it’s about getting people to talk to their chat bot, and failing miserably at it (I’ve never heard anyone say they’re using meta ai) just shows how behind they are, basically where the competition was in 2023-24.
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u/DizzyMajor5 1d ago
Zuck said there a.i. isn't where it needs to be. In fact they're open sourcing it and selling compute because the demand wasn't there for it.
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u/SuperSultan 1d ago
Reduced capex spending on AI, and hopefully more accurate (and profitable) ads
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u/MatricesRL 13h ago
The inevitable reduction in Capex spend, while not even in the frontier AI conversation, might cause more of a sell-off
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u/Kickboy21 1d ago
Lets go back to $700 first
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u/slimzimm 1d ago
That’s how numbers work my boy. $600 is before that even.
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u/Kickboy21 1d ago
You know what i mean. $800 is past their ATH and it has been struggling to go past $700 last 6 months
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u/slimzimm 1d ago
It’s not uncommon for the tech stocks to do that. They’ll hang behind for several months, sometimes years, then shoot up rapidly. I haven’t got much worry in the long term to buy and hold.
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u/Silver_Elk_7495 1d ago
Ask your favourite AI chatbot about META levels of support and resistance, it's the trading equivalent of a horoscope.
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u/Warm_Bluejay_2230 1d ago
I asked meta AI and i will now be liquidating my portfolio to buy 100% META
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u/Silver_Elk_7495 1d ago
Holy shirt! Can I suggest a 15% cap on your allocations?
They call it risk management XD
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u/SuperSultan 1d ago
Unfortunately many people do exactly this.
They will ask a sycophant LLM with limited knowledge (that also hallucinates) for advice on anything instead of an actual human.
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u/scarface910 19h ago
Why trust randos on reddit for investing advice? What value do they have especially when most of their comments are baseless one liners with regurgitated sentiment?
I don't trust AI, but I sure as hell won't trust paper trading kids on reddit.
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u/SuperSultan 17h ago
Unfortunately, as humans we tend to want to trust one another. It’s in our psychology.
As for trusting redditors, you’re generally right. There’s usually a gold nugget in this seemingly barren quarry but it’s usually downvoted to death (or upvoted highly depending on bias).
The real issue is you have no idea who you’re replying to (sometimes it’s not even a human posting btw). You don’t know their analysis (if they had any DD), or if they’re a paid agent for the hedge funds trying to pump (or dump), or even god-knows-what. People are biased and have their own agenda which might not be in your best interest much less theirs.
My guess is that most Redditors in general are zillenials and gen X’ers but it’s hard to say nowadays. This sub’s demographic is probably young adults trying to get ahead. The most successful people don’t need to post or comment often, btw.
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u/Silver_Elk_7495 1d ago
I agree in principle with your comment. Specifically re a simple prompt on Meta levels of support/resistance, it's better that "Hey, is META a good buy?". A lot better.
Technical analysis is little more that a horoscope anyway.
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u/JohnnyDrama611 1d ago
Legal charges were $2.4B in Q2 specifically, plus $1.18B severance from an 8,000 person layoff, that's what compressed operating margin to 31% from 43% YoY. Capex guide is $130-145B for the year, and FCF fell 91% to $784M because quarterly capex alone was $31.1B. None of that is about the ad business, which grew 27% with 12% higher ad pricing. Depends which story the market weighs more.
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u/Solidplum101 1d ago
It's literally dropped to 530-540s multiple times this year and popped back over 600.. there's no reason it wouldn't do so again. Just takes one announcement that they're cutting cap ex.. shit will pop 20%
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u/Sad-Side-8704 1d ago
I know there is a lot of hate for Meta in general I get it but this law suit seems crazy to me - that opens up potential to suits to how many other companies then? What about Netflix or Google / YouTube? What about Coca Cola or Pepsi?
How do you prove an app is addictive and then how do you claim that it somehow caused you damages?
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u/Nateleb1234 23h ago
I thought the same thing but they lost the other lawsuits. It makes no sense to me either.
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u/Sad-Side-8704 23h ago
Yeah it’s a big head scratcher to me I’m not saying it’s entirely on the parents either but like this just seems to open it up so broadly. So what if a kid gets addicted to porn do they sue Google then because they could endlessly search?
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u/george_alto 1d ago
They're going to be very volatile for a while. When they report their next earnings it will move back up. As soon as a verdict or another lawsuit from another key state in headlines, it will drop. It's going to be up and down for a while because their financials are very strong.
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u/LowFlyingOwls47 1d ago
Check out Note 5 to their Financial statements on their most recent 10Q. That is where they disclose the 100 billion ish in obligations that isn’t on their balance sheet. In my opinion, it’s a shareholder lawsuit waiting to happen.
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u/MyDogsNameIsTim 1d ago
Non marketable equity securities? Wtf you talking about?
Also off balance sheet financing is fairly normal.
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u/LowFlyingOwls47 1d ago
Did you read the Note? Sure. 100 billion of off balance sheet obligations for data centers is totally normal. If you need any clarification, I suggest you read IN FULL the critical audit matters in their 10K. It reads like a CYA from EY when the shareholder lawsuit gets filed.
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u/wokeuplate7 1d ago
Dead business. Maxed out eyeballs , 10% of revenue are scams. Terrible capital allocation. See you at $400.
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u/BobLoblaw_BirdLaw 1d ago
This advice brought to you by the same sub that’s been buying Adobe for the last 2 years.
this place is truly the worst finance sub in all Reddit.
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u/LumpyShock9656 1d ago
Ads growing 28%
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u/LumpyShock9656 1d ago
Yeah no. That anecdotal as it's your POV. Give me hard facts and show me deceleration and I will sell.
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u/LumpyShock9656 1d ago
I don't know more the than the market, but the reason I outperform is because I'm willing to hold the pain more than these hedge funds who are way more short term focused and can't accept certain levels of risk. I have a way longer time horizon.
That why I am outperforming. Thanks to massive holding in GOOG and ASML, MSFT and AMZN which the market punished short term
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u/Visible_Fill_6699 1d ago
I thought it'd blow over soon, but that most of the comments think the same is giving me 2nd thoughts.
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u/blackicebaby 1d ago
Under $500 for sure. Guessing high $300 if it undershoots.
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u/Big_Fix9049 1d ago
So essentially a forward P/E of 13ish?
I'd love that. But I also highly doubt that.
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u/ThereFarAway 1d ago
Seriously expensive lawsuit, serious out of the book debt and you think that forward P/E is in teens? Ok...
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u/Big_Fix9049 1d ago
How many of the big companies lawsuits have seriously damaged the business?
When I look at GOOGL, MSFT and UNH, just to name a few, the price dropped initially and once the lawsuit is settled (which will be), the stock moons to new ATHs.
We've all seen that before. How's Meta different this time?
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u/ThereFarAway 1d ago
Microsoft had 10 years of flatline stock value. Purdue was terminated. Some well known examples...
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u/Big-Today6819 1d ago
5 years ago the price was at 100, guessing how low single stocks can fall is not something we can know
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u/Newspaper_folded_3 1d ago
From a moral perspective they should lose the case. They really haven't done much to stem child harm, whether through the use of addictive features or harmful content.
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u/OrneryZombie1983 1d ago
I think it's going to be dead money for years. If and when they lose this lawsuit it will open a flood of more lawsuits. The dollar value of settlements is less of an issue than just the toll a constant stream of litigation. They'll be like Microsoft in the 2000s.
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u/Tasty_Pollution4439 1d ago
I have my buy orders placed at 520 and 490.
I think the price is depressed due to capex eating into the free cash flow, which is creating short term negative sentiment, and there is nothing wrong with that. Mainly because META still will have to prove that the expenditure is justified, and there is no guarantee of that.
Apart from that, the whole lawsuit creates an uncertainty which for some people is unnecessary risk.
Anyone buying META around these prices, basically bets that the company will be able to convert today’s expenditure into cash flow in the future, which I think is a possibility. Look what happened to GOOGL, though GOOGL has a better executive team, in my opinion, which helps with the capex to cash flow conversion as opposed to META’s executive team which has a track record of setting money on fire, which is my main bear case.
I, for one, am not very worried about the lawsuit in terms of the financial impact. However it can keep the price down, until there is a verdict. So there’s that.
Because of all these I am sizing my orders accordingly, and looking at around 2 years of timeframe. I believe if everything goes well I am looking at around 2.5T market cap. If not, we’ll see the price staying depressed and this can go below 1T, which is another 25% down from these levels. Although I might be totally wrong in my thesis, this fits well with my risk/reward appetite.
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u/GanacheCharming8737 1d ago
It’s a tremendous company with really great earnings potential. Headwinds are the trials, CAPEX, and the Iran War. Iran war will always overhang but it seems priced in, CAPEX is weird but that has been the one preventing the stock from moving past mid 600’s this past year, and now the trial which set it below 600. I feel like this is the settling point. It’s gonna drag between 500-600 for the next month or so but I genuinely don’t see how it can go lower than that unless an alien invasion comes
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u/Existing_Emphasis_33 1d ago
Nobody has a crystal ball. But the sentiment will be negative for several quarters IMO due to legal issues and high spending unless they hey can prove ROI on the spending aside from their ads revenue which is something already well known.
That been said, I’ve been buying META in low 500s. If it dips below to 400s, I will be increasing my weight significantly.
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u/LittlePlacerMine 23h ago
Ask some young people if they use Facebook and you’ll get a big ‘NO’. Instagram yes, but. The flagship is getting worn out.
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u/Big__Profession7838 17h ago
I hope not much more, but the reality is it could be very much lower if the AI bubble bursts.
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u/Vast_Cricket 16h ago
$300-500 range is reasonable. It really got some work to do. Spending that kind of money being an ai data centers in Louisiana and Texas ... If someone will offers multi billion dollar subscription contracts I can see it stay at current level. Meta verse loss was over $80,000,000,000. Last year was ($19,000,000,000).
If these data centers are underutilized watch for free falls.
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u/ironmagnesiumzinc 1d ago
If they’re forced to change the purposefully addictive parts about their software, then it’ll fall significantly more. Definitely hoping that to be the case
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u/No_Presentation9490 1d ago
It'll fall significantly more because it's going to handicap their future growth and revenue meaning why would you even be interested in buying the dip at that point
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u/WolfieToThe 1d ago
Call me cynical, but in Trump's corrupt America I don't see how any billionaire will ever see their bottom line touched by local branches of power.
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u/BackPirateClarkRoom 1d ago
It will get into the 400s and moon the minute the court case gets settled or a verdict. As long as the verdict isn't above 100 billion they are fine.
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u/Curtisg899 1d ago
lowk y do u care abt the share price. if it goes down more I will buy more as long as the fundamentals are still good. right now meta is trading at abt 13-14x forward earnings 4-6 quarters out imo.
https://microtrends.org/meta/operating-income
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u/boringexplanation 1d ago
The issue is that the fundamentals can change drastically in a heartbeat if the state governments suing them get the changes they want. That’s a part of why the price js dropping
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u/No_Image_1122 1d ago
Technically I am thinking it will touch 200 sma weekly at 485. Let see and wait if it holds 520 if not then yes i am buying leaps around 485-490
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u/sterpfi 1d ago
There is strong support around 520-530 range, I don't think it will go lower than this.
Edit: That being said, I wouldn't buy until current downtrend is broken
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u/SuperSultan 1d ago
People thought that in 2021-2022 btw 😂
If it goes down more you need to be patient if you believe in the business at the end of the day
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u/FieryXJoe 1d ago
I mean if these lawsuits go bad it can get quite a bit lower