Meta Attracts Big Money Option Trades as Analysts Expect 59% Jump in Q2 Earnings

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.

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.