Meta Platforms (FB) Stock News and Forecast: Facebook parent sees all-time lowest weekly RSI reading

• Meta Platforms stock drops 3% on Thursday.
• FB shares have continued to drop since early February earnings call.
• Meta stock has dropped below 20 on the weekly RSI, its lowest reading ever.

Meta Platforms (FB), the owner of Facebook, Whatsapp and Instagram, dropped 3% on Thursday to $192.60. With a reading just under 20 on the weekly chart, FB stock has reached its lowest Relative Strength Index (RSI) level ever. Shares of the forlorn social media king and future metaverse competitor are down somewhat worse than the wider market. The tech-heavy Nasdaq is down 1.7% at the same time. The market is mostly drooping due to another high inflation reading in the US and peace talks between Russian and Ukraine that failed rather quickly.

Meta Platforms Stock News: High inflation adds pain to market

Inflation is back in the news on Thursday after the Bureau of Labor Statistics in the US released its February Consumer Price Index (CPI) reading. The CPI came in at 7.9% YoY compared with January's 40-year high of 7.5%. This is not too surprising with the Russia-Ukraine war leading to severely higher energy prices, as well as possible wheat shortages forthcoming. With inflation this high, there are worries that a recession may be in the offing, which would hurt corporate earnings across sectors.

Chief Operating Officer Sheryl Sandberg made headlines on International Women's Day on Tuesday with the line in an interview that "No two countries run by women would ever go to war." She also criticized Russia. “Social media is bad for dictators," Sandberg said. "That’s why Putin took us down."

Russia cut off access to Facebook on March 4 after Facebook barred several state-sponsored media organizations from using their accounts. Roskomnadzor, the Russian media regulator, said that Facebook failed to respond to its messages after Mark Zuckerberg's company restricted the accounts of the Zvezda TV channel, RIA Novosti, and internet sites Lenta.ru and Gazeta.ru. The tit-for-tat drama has increased with Meta-owned Instagram now attaching warning labels to Russian state media that posts on its platform.

On Tuesday in San Francisco federal court, Meta was sued for its 26% share price plunge in early February. The crash in value was caused by poor Q4 results that showed the social media behemoth seeing slowing user growth. The Plumbers & Steamfitters Local 60 Pension Trust filed a class-action lawsuit saying Meta had failed to warn shareholders about the threat from Apple's privacy changes on the new iOS. These changes have hurt Facebook's advertising model, which relies on user data, and may cost the social media leader to miss out on as much as $10 billion in advertising this year, according to the lawsuit.

“Instead of being transparent with investors, defendants painted a false and misleading picture of the mitigation efforts Meta put in place to counteract the changes in iOS and rebuild Meta’s advertising business model,” the lawsuit reads.

On Tuesday, Piper Sandler cut its price target on Meta Platforms stock to $240 from $301 but kept its "outperform" rating on the shares. The firm said the poor performance may continue until August.

FB key statistics

Market Cap	$544 billion
Price/Earnings	14
Price/Sales	4
Price/Book	4
Enterprise Value	$511 billion
Operating Margin	40%
Profit Margin	33%
52-week high	$384.33
52-week low	$187.28
Short Interest	1%
Average Wall Street Rating and Price Target	Buy, $331.09

 

Meta Platforms Forecast: Lowest weekly RSI in history

The Relative Strength Index (RSI) has now dropped just below 20 on the weekly chart, which makes it extremely oversold. From our vantage this is the most oversold on the weekly chart that FB stock has ever been. The only close level is near the IPO back in August 2012. Even then the RSI reading was 21 or 22, not 19. Selling volume has been steadily reducing since early February as well.

If you are focused solely on where to enter Meta Platforms stock, then $173 is the nearest major support and your best bet. This price acted as occasional support in June 2019 and August 2018 and then as resistance in the summer of 2017. 

Two other sources of support on the weekly chart are $160 and $137. As we wrote yesterday: "$160 acted as support in January through March of 2019 and then again in June of that year. $137 was the range low at the beginning of the COVID-19 pandemic." FXStreet doubts that either of these levels will be reached, partly because the current valuation plunge has already left FB stock at an attractive price. Additionally, $173 does not seem likely to be breached, since it has held up on so many occasions.

Meta Platforms stock first needs to regain the $200 level to be seen as neutral. It will only gain bullish momentum when it rebreaks above $245.

FB 1-week chart