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Meta Attracts Big Money Option Trades as Analysts Expect 59% Jump in Q2 Earnings
$Meta Platforms (META.US)$ saw institutional investors trading millions of dollars in stock options heading into earnings that could offer signs of the ad pricing power of Facebook's parent company at a time when politicians are boosting election spending.
At 9:44:07 a.m. in New York Monday, an unusual bearish trade was posted costing $2.61 million for call options that give the holder or holders the right to buy 186,000 Meta shares at $490 by the end of next week.
Last week saw a good mix of unusual options trade costing millions of dollars, including nine bearish and 11 bullish transactions for contracts expiring between Aug. 2 and Sept. 20. The strike prices range from $400 to $512.
Sentiment is mixed for the social media giant that's expected to report a 59% jump in earnings to $4.75 a share in the second quarter, from a year earlier, according to analyst estimates compiled by Bloomberg. Revenue for the parent of Facebook, Instagram, WhatsApp and Meta Horizon, is seen climbing about 20% to $38.3 billion, the estimates show. The company's results are due after the market closes on Wednesday.
Meta's second quarter ad revenue is expected to climb to $37.57 billion, according to the average of analyst estimates compiled by Bloomberg as of July 29.
Mizuho's proprietary agency tracking shows Meta's ad revenue tracking "modestly ahead of Street expectations," the bank's analysts said in a note July 21. The analysts kept their outperform rating on the stock and the price target of $575.
Beyond the top and bottom line, analysts could be looking at the company's ad pricing. That and election-ad spending could be "key drivers for surpassing consensus sales growth expectations of 20%" in the second quarter, Nishant Chintala, an analyst at Bloomberg Intelligence wrote in a note July 10.
Beyond the top and bottom line, analysts could be looking at the company's ad pricing. That and election-ad spending could be "key drivers for surpassing consensus sales growth expectations of 20%" in the second quarter, Nishant Chintala, an analyst at Bloomberg Intelligence wrote in a note July 10.
As of 12:05 p.m., fund outflows from the stock outpaced inflows by $111.6 million, according to capital trend data tracked by moomoo. That takes the net outflows so far this month $1.16 billion.
Meanwhile, technical indicators on the moomoo app are flashing no obvious signal, with only one of the 15 gauges showing that the stock could be overbought, and the trend may turn relatively bearish. Four others are flashing signs that Meta could be turning bullish.
"Though Meta's position remains strong in generative AI, a top-line lift from licensing its Llma model to enterprise customers and adoption of subscription chatbot offerings, similar to OpenAI and Gemini Advanced, will be a key focus on the earnings call," BI analyst Chintala said in a note dated July 10.
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Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. All company analysis information is provided by third parties and not by Moomoo Financial Inc. Any illustrations, scenarios, or specific securities referenced herein are strictly for informational purposes and is not a recommendation. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.
Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. All company analysis information is provided by third parties and not by Moomoo Financial Inc. Any illustrations, scenarios, or specific securities referenced herein are strictly for informational purposes and is not a recommendation. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.
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Luzi Ann Santos
Moomoo Senior News and Community Manager
Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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BelleWeather : I think META way ahead in AI. Accumulating shares accordingly.
Derpy Trades : After reading "At 9:44:07 a.m. in New York Monday, an unusual bearish trade was posted costing $2.61 million for call options that give the holder or holders the right to buy 186,000 Meta shares at $490 by the end of next week" I stopped reading the rest. Buying calls is anything but bearish.