News and analysis

Shares of Meta Platforms (META) plummeted by nearly 15%, from $493.5 at closing time of Wall Street's regular session on Wednesday, April 24, to as low as $418.5 in after-hours trading. Current levels are nominally looking so attractive for purchasing stocks of the giant Facebook and Instagram owner, as prices are surely more reasonable for entering this market after the last three months when Meta was extremely costly for investing. Nevertheless, such a severe form of negative response to solid quarterly results of a mega cap company makes us think about the feasibility of taking extra time for probably a better, or at least a more risk-balanced decision, as even lower prices may appear in May. So, simply watching the further dynamics seems to be a rational choice in a rather mixed and complicated environment.

The problem actually was that a substantially better-than-expected EPS number of $4.71 per share, compared with $4.32 per share in analyst poll forecasts, provided a more than 9% advantage against average projections and also impressively doubled Q1 2023 EPS of $2.20. In a normal frame of market minds, this would protect the company's value from an excessively large drop, even though some softer updated guidance for the rest of the year. Another positive thing was that a much better financial return has been squeezed from growing revenue as well, but the pace of revenue rise (less than 1% vs expectations and 27% YoY) was more humble than the speed of income growth.

These achievements were driven by more daily active users than expected (amounting to 3.24 billion) and 6% YoY growth in average prices for advertisers. Yet, the crowd and most investment houses were agitated mostly by weaker points this time, pointing to the general anxiety mood related to Meta Platforms at the moment. Meta CEOs praised improving its advertisement products with AI tools like a last generation chat assistant and Llama 3, an open-source large language model that is designed as a ChatGPT competitor, while Reels (short video) formats also helped a lot in attracting customers, yet those inspiring remarks were mostly ignored by the market. At the same time, Meta was declared "guilty" enough for a tough sold-off due to the company's guidance for total revenue within the range of $36.5 billion to $39 billion for Q2 2024, meaning $37.75 billion at the midpoint to miss average analyst bets on $38.3 billion. Compared to about $36.5 billion in Q1 2024 and $32 billion in Q2 2023, Meta projections were not so sad.

Another "fault" in Meta guidance was that its full-year capital expenditures for 2024 were up from a previously estimated range of $30 billion to $37 billion, now reaching $35 billion to $40 billion. Following only $28 billion spent during a "year of efficiency", proclaimed in 2023, Meta commented it would continue to accelerate its infrastructure investments to support an "artificial intelligence roadmap". A planned increase in spending on generative artificial intelligence features, which is perceived as a boon for many other companies, is somehow interpreted in a different manner by investors for Meta, which is apparently expected to take a more economizing approach.

Meta founder Mark Zuckerberg, who backed all strict cost-cutting measures in 2023, including massive employees lay off, also said that increased investments into AI chips and big data processing are necessary for Meta to become "the leading AI company in the world". Yet, the analysts group at Goldman Sachs argued that "such a narrative results in a slight reduction in forward revenue trends'', while experts at Stifel emphasised in a client's note that the "biggest question" is whether Meta can "meaningfully monetize AI over time to justify the investment cycle".

The current intonation of many comments also shows large funds are more eager to believe in chip producers like NVidia and creators of the AI tools like Microsoft and aggregators like Google, than in financial success of pure AI users in the next year or two. The growing competition from other social networks, like Elon Musk's free speech X or China's regional communication platforms, should also be taken into account. That's probably why we are thinking of a more cautious approach to choosing particular price levels before buying Meta shares after the recent drop.

IOTA (IOT) is experiencing a 1.5% decline this week, with its value dropping to $0.2330. Despite efforts, the token couldn't surpass the resistance at $0.250 and regressed to $0.2300. There's a possibility it could further decrease to $0.2000, although its ability to sustain above this level is crucial for any potential upward movement.

Investors are showing some disappointment due to the deteriorating ecosystem of the project, particularly with the significant decline of assets in ShimmerEVM. The Total Value Locked (TVL) has seen a notable drop, plummeting from $13.9 million in 2023 to $3.6 million currently.

I'm considering a modest risk investment strategy amidst anticipated stock market turbulence, and I find the Mexican peso particularly appealing. The USDMXN pair has shown a consistent pattern of following an ascending channel since 1994, with the support of this channel proving resilient on multiple occasions. Currently, prices are resting at this support level, presenting what I believe to be an excellent buying opportunity within the range of 16.500-17.500.

My target for potential gains lies within the range of 23.500-25.500, representing a potential upside of 42.0%. To mitigate risk, I've set a stop-loss at 13.000, ensuring that losses are limited should the market move against my position.

In my assessment, even in a worst-case scenario, I anticipate the pair to follow the support of the channel, providing a level of stability. However, in the event of significant crisis events akin to those seen in 2008 and 2020, I believe the pair could see substantial upward movement.

This strategy resembles a safe-haven call option, where I maintain the position open while paying only for the opportunity it presents.

Ontology (ONT) has surged by 4.5% to reach $0.422 this week. This comes after an impressive 27.0% spike to $0.514, marking its highest level since April 2022. Such a significant increase stands out against the backdrop of 20-40% declines seen in other altcoins. Despite experiencing a correction during the Iran missile attack on Israel, which saw ONT drop by 36.0% to $0.250 on April 13, prices managed to stabilize due to both technical and fundamental factors.

The performance of Ontology in the crypto market has been remarkable. It has maintained its position above the support level at $0.400 and appears poised to continue its upward trajectory. There is potential for ONT to test the resistance level at $0.500, or even surpass it in the near future.