Meta Platforms shares came under heavy pressure yesterday, falling by roughly 8% and closing below the $550 mark — their lowest level since late April 2025.
What Triggered the Decline in META?
The sell-off appears to have been driven by several key factors:
→ Court ruling. Media reports indicate that a jury ordered Meta to pay $375 million for misleading parents regarding the safety of Instagram and Facebook. The company was also found responsible for developing algorithms deemed addictive and harmful to teenagers’ mental health.
→ Large-scale capital spending plans. Meta reaffirmed its 2026 CapEx guidance of $115–135 billion. A substantial portion is set to be allocated to energy infrastructure, including a 6.6 GW nuclear power agreement to support the Prometheus supercomputer. Investors may question whether AI-related returns will be sufficient to justify such aggressive spending.
Market sentiment has been further weakened by reports of potential workforce reductions of up to 20%. While cost-cutting measures are often seen as positive, in this case they may reflect mounting pressure on profit margins due to elevated AI investment.
Technical Outlook for META
Back in late January, we:
→ identified two key trend channels;
→ highlighted the breakout above the $700 psychological level.
However, that move ultimately proved to be a bull trap following strong earnings. By early February, the price had retreated to the lower boundary of the long-term ascending channel, which was decisively broken on 13 February amid strong selling pressure.
This shift suggests that the prior uptrend is losing momentum, with price action now aligning more closely with a descending channel identified earlier. Within this framework, the $620–640 zone — previously a breakdown area — may now act as resistance.
Further signals of weakness include:
→ the loss of support at the $600 psychological level;
→ a wide bearish candle closing near its low on elevated volume, pointing to strong selling interest.
Overall, if sellers maintain control, the price could continue to decline towards the lower boundary of the descending (red) channel.
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