Meta Platforms Inc. reported another strong quarter after the stock market closed on Wednesday. Q3 revenues rose 20% in constant currency, accompanied by an even bigger surge in both earnings and free cash flow. Investors were still not impressed, however, judging by the 3% price drop post-market. Could this be because of the phase of Meta’s Elliott Wave cycle?
Over five months ago, in mid-May, while the stock was at $475, we wrote that “the time to take your Meta profits and run is near.” After examining the daily chart below from an Elliott Wave perspective, we thought that the stock “should make a new all-time high in the vicinity of $600 a share soon.” Once there, however, the five-wave impulse from the 2022 bottom would be complete and, according to the theory, a notable correction should follow.
The sharp recovery from $88 a share looked like an incomplete impulse pattern, marked (1)-(2)-(3)-(4)-(5). The five sub-waves of waves (1) and (3) were also visible, but its fifth and final wave was still missing. Therefore, it made sense to expect more upside in wave (5) towards $600 before the bears show up. The following updated chart shows how the situation unfolded.
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The first thing to notice is that wave (4) wasn’t over yet. It evolved into an a-b-c-d-e triangle correction, which delayed the fifth wave rally until after July. It didn’t cancel it, though, and Meta stock finally reached the $600 mark earlier this month. The other highlight of this chart is that wave (5) can also be seen as an impulse pattern, labeled 1-2-3-4-5.
Perhaps we would see one last push higher in wave 5 of (5) to ~$620. Instead of chasing it, however, we think investors should view it as a last chance to evacuate. A notable three-wave correction can be expected to drag the stock price down to $400 or lower in the months ahead. If this count is correct, the time to take your Meta profits and run has arrived.
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