Major growth stocks are under pressure along with the broader market, but not meta platform (META), is scheduled to report earnings next week. Meta stock has a relatively strong line near its highs and is one of four Magnificent Seven stocks on the earnings calendar. microsoft (MSFT), Google’s parent company alphabet (GOOGL) and tesla (TSLA).
X
Amid slowing growth and increasing competition, Tesla stock isn’t exactly great. Tesla is currently down about 50% from its high after a steep decline that began in late December.
Tesla announced earlier this month that its first-quarter deliveries of 386,810 vehicles were well below expectations, marking the lowest quarterly deliveries since the second quarter of 2022.
As a result, the Street does not expect Tesla to deliver strong results when it announces after the close of trading on Tuesday. Analysts surveyed by Zacks Investment Research expected adjusted earnings of 46 cents per share, down 46% from a year ago.
Sales are expected to decline 5% to $22.17 billion. Analysts say annual profits are likely to fall by 15% this year, and expect growth to pick up again in 2025, rising 37%.
Meta stocks are strong
While several strong-performing growth stocks have breached key support levels in recent days, meta stocks have not. The main reason is that the fundamentals are strong.
Meta stock rose sharply in early February after the company announced its second consecutive quarter of triple-digit profit growth and another quarter of accelerating revenue growth. Digital advertising sales accounted for the majority of revenue, increasing 24% to $38.7 billion.
Meta’s family of apps, which includes Facebook, Instagram, WhatsApp, Reels and Threads, brought in $21 billion in revenue, nearly double the $10.7 billion in the year-ago period.
Expenses decreased 8% to $23 billion, and operating margin increased to 41% from 20% in the year-ago period. The number of monthly active users increased slightly to 3.07 billion. The company also raised its earnings outlook and began paying a dividend of 50 cents per share.
Earlier this week, UBS reiterated its buy rating on the stock and raised Meta’s price target from 530 yen to 610 yen. UBS cited potential new initiatives, including advertising revenue from Meta’s Reels short video product and its AI-powered Advantage+ ad sales platform. . UBS’s note follows positive comments from Piper Sandler, who raised Meta’s price target to 600 from 525.
Results are expected to be announced after the close of trading on Wednesday. First-quarter earnings are expected to increase 64% to $4.32 per share. Sales growth is expected to accelerate again, increasing 26% to $36.22 billion.
leaderboard earnings
Meta Platforms is a long-standing member of the leaderboard, having first joined the model portfolio in March of last year.
Two other leaderboard stocks — weatherford international (WFRD) and dexcom (DXCM) is also on the earnings calendar.
Weatherford is testing the 10-week moving average for the first time since breaking out of consolidation in February. The company provides equipment used in drilling oil and natural gas wells.
Weatherford has shown impressive earnings and sales growth in recent quarters. The company announced in early February that fourth-quarter profits rose 70% and sales rose 13%, but first-quarter profits rose 45% to $1.41 per share and sales rose 12%. It is expected to be worth $1.33 billion. Results are expected to be announced before the start of the season on Wednesday.
More than 600 funds had positions in Weatherford at the end of the first quarter, up from 472 funds in the same period last year.
Dexcom is well positioned
On the other hand, Dexcom also has strong fundamentals and, like Weatherford, is well-positioned for continued growth.
The stock remains in a buy zone from a buy point of 132.03 after clearing an alternative entry of 137.93 on March 25th.
The company manufactures continuous glucose monitoring systems used by diabetics. Shares soared on March 6 after the company received approval from the Food and Drug Administration for the first over-the-counter glucose sensor in the United States. This device, Stelo, was approved for 25 million people with type 2 diabetes in the United States, but they do not use insulin.
Dexcom offers a compelling growth story thanks to its strong demographics. Obesity rates among adults have more than doubled over the past 30 years, according to a study published in February in the medical journal Lancet. The study also stated that more than 1 billion people worldwide are defined as obese.
Earnings are expected to be announced after the market closes on Thursday. Adjusted earnings are expected to rise 59% to 27 cents per share, and sales are expected to rise 23% to $911.2 million.
options trading strategy
A basic options trading strategy focused on returns using call options allows you to buy stocks at predetermined prices without taking on significant risk. Here we explain how options trading strategies work and what calling option trading on meta stocks looks like these days.
First, identify the stocks with the highest valuations on bullish charts. Some may have a healthy early-stage base in place. Some may have already broken out and found support at the 10-week line for the first time. And some may trade firmly near the high and not concede much. Avoid stocks that expand far beyond their appropriate entry point.
A call option is a bullish bet on a stock. A put option is a bearish bet. A call option contract gives the holder the right to buy 100 shares of stock at a specified price, called the strike price.
Once you identify a bullish setup on the earnings calendar, check the strike price on your online trading platform or at cboe.com. Make sure the option is liquid and the spread between bid and ask prices is relatively narrow.
Look for a strike price that is slightly above the underlying stock price (out-of-the-money) to confirm the premium. Ideally, the premium should not exceed his 4% of the underlying stock price at that time. In some cases, an in-the-money strike price is fine as long as the premium is not too high.
Choose an expiration date that aligns with your risk objectives. However, keep in mind that time is money in the options market. Insurance premiums that are closer to the expiration date will be cheaper than those that are further away. Buying time in the options market has a higher cost.
Metastock options trading
When Meta stock was trading around 504.50, the weekly call option expiring April 26th with a strike price of 505 was slightly out of the money, with a premium of about $23.25 per contract. This was equivalent to 4.6% of the underlying stock price at the time.
One agreement gave the holder the right to purchase 100 shares of Meta at a price of 505 shares each. The maximum amount he could lose is $2,325, which is the payout for his 100-share contract. To break even, the meta would have to rise to 528.25, taking into account the premium paid.
The expected move in the options market for Meta stock is approximately 46 points up or down based on an at-the-money strike price of 502.50. This can be seen by adding the at-the-money call premium and put premium for the April 26 contract.
Note that purchasing 100 shares of Meta in the above trade would cost $50,500, so this is not a small portfolio trade.
Follow Ken Shreve on X/Twitter @IBD_KShreve For more stock market analysis and insight.
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