Why Did $META Crash 10% After Reporting Earnings?

So, what the heck happened with Meta today? What's going on, guys? It's Ricky, and that's exactly what I want to answer in this video. Let's go ahead and just jump right into my screen, and I really hope that I do a fair job breaking this down. Again, my goal is for you to learn something new. And if you do, please consider dropping a thumbs up and subscribing if you feel like we earned it. So, shortly after the FOMC press conference, we live streamed all of that. Markets began to do a V-shaped sell-off, right? aggressively began to gap down, began to derisk and sold off into the aftermarket hours. It's not until now that markets are actually beginning to try to recover. QQQ was down 2% on the day, but sold off another half of a percent during the aftermarket hours and then now it's up 1.2% during the overnight hours. That's not the big concern. The big concern is what happened with Meta. Meta was trading at nearly $600 per share. It had a relatively light red day and then at one point it was down to lows of 518. Where is the fear? It's currently trading at 546. And again, congratulations to all of our Microsoft investors. Microsoft had a huge gap up. Again, a little update for you guys. My Micron trade, I think I was up about 14 uh $13,000 on my trade earlier when we were doing the FOMC press conference. We took a short, it sold off. I made the I think I was up 10K, then I made the 13K. Um, and then I bought the dip at 720. So, my average price wasn't the best, but my position size was really good. As it began to uptick, I actually just announced it to my LPP team. I let them know that I just sold during the overnight hours, and now I'm up 14.9K on the day. That's not a normal trading day for me. This is a huge day, three times my daily goal. U, but again, an incredibly volatile day, right? like the past 24 hours has been insane. With that being said, let's go ahead and get to the main point of this video. Meta, let's do it. The first thing that I want you to understand is that Meta did not report terrible earnings. So, Microsoft reported great earnings, beating both EPS and revenue. Meta did miss earnings per share. They did beat revenue, but Meta's revenue is insane. It's incredibly impressive. So, why did it sell off so much? So the thing that you need to understand is that there isn't really anything abnormal about meta reporting earnings. The reason that it missed earnings per share. It's not a scapegoat like it's it should have sold off because it did experience higher expenses. But EPS miss was only due to legal and severance charges. If it weren't for those charges, it would have been a huge beat. The average price per ad and ad impressions were up 12 to 14%. None of this should have been a huge surprise. Now, capex guidance was slightly narrowed. And again, I would say that that is one of the biggest outliers. The thing that really stood out to me, and again, this is just my opinion. You guys let me know down in the comments section what you think. Meta offered no 2027 capex guidance. To me, that's a copout. They are afraid. I again, that's it's speculating, but it's a lot of investors that think this way. Why would he be scared to to disclose those numbers if if they were good? I believe Meta is going to continue to overspend and overinvest into AI and they simply didn't want to disclose it. They knew that if they did disclose larger numbers than what was already factored in, Meta could have possibly sold off even further. And I think that was their concern. But nonetheless, them not disclosing is bad enough. Remember, markets do not like uncertainty. And when you're trading at a high premium, again, you cannot disappoint these investors. Now, Meta no longer is trading at that high premium, but it is disappointing investors by not being able to properly disclose their actual guidance that they had no previous issue disclosing prior. Now, the thing that I want to show is that Microsoft is a great example of doing it right in comparison. I'm not I don't really want to compare it to Meta. I want to compare it to Google. Google beat earnings per share and revenue expectations. But Microsoft, the biggest difference is that Microsoft also beat the same two, but they left capex unchanged for 2026. They don't plan to continue to aggressively spend in AI, right? And said that they will continue to remain free cash flow positive. How did the markets react? They loved it. It seems like the the the Wall Street or Wall Street really hates capex and I think that is the important thing to kind of understand here. I thought this was beautifully laid out. These are the MAX 7 companies. Ignore Tesla. I just have to include it because it's part of Max 7. Terrible P ratio. But the rest are trading at relatively low P ratios. I mean Apple's trading nearly at alltime highs. So maybe that's a bad example. But Meta, Nvidia, Microsoft, and Google all fundamentally great value plays right now. Is Meta no longer growing as a company? No. What do you mean? Right? If you jump on to Investing Pro and you click on Meta Research, ah, why is it doing this right now? Let's see if I refresh it. There it goes. Meta is performing at one of the best levels that it has been ever. Like it is killing it. When you look at Meta and their P ratio, their revenue 215 billion, $70 billion in net income. Meta is not a speculative stock. It is a MAG7 company through and through. It is a money printing machine. Unfortunately for some investors, they're aggressively investing into AI more than they possibly are making in the short term. So I view this to be quite simple. Now again, it's the simple things in life that people like you and I overcomplicate it. We can see fundamentally these are great performing companies. They're great value plays. The question you need to ask yourself is, do you believe in this overinvestment or do you believe it's a waste? I don't believe one is more right than the other. Only time will tell. Who am I to pretend like, oh, you're wrong, I'm right. I'm going to invest in Meta and watch. You'll see. Meta has been wrong in the past before. Metaverse, Oculus, goggles. But Mark Zuckerberg has made it super clear. The risk of underinvesting to him is greater than the risk of overinvesting. He would rather overinvest and be one of the top players to solidify his spot and his position for his company than underinvest and end up paying the price for it. Again, it doesn't mean that you have to align with that aggressive investment. And that is where I think it's important to look within because all investors are different. If you do not believe in this AI spend in AI being the future, then it makes sense on why you are bearish on meta. every right to be kind of more of the I wanted to show it here the Michael Bur approach the circular flow of money and investment. If you do believe in that, again, there there's there's some, you know, ground behind what it is that he's saying. It could be too much, too quick, and a possible overinvestment and investors will pay the price, right? And this correction is showing that investors are beginning to derisk. You have every right to be bearish if that is your thesis on Meta. But again, let's not just think about what's going on today. Let's think about big picture. Much easier said than done, right? We're able to buy Meta now at around $546 per share. It doesn't reflect it yet because again, this thing just gapped down $540 per share. At one point it was lows to 520. And it can continue to sell off because we have Apple and Amazon reporting earnings tomorrow. So definitely it can get worse before it gets better. But this is all short-term volatility, right? Like we're we're feeling the panic right now just like we felt the panic during the pandemic. Where are we now? Where's the pandemic? Right. Can any can anyone here point me to where the pandemic is at? Right. Where was it? Right here. Right. Pandemic. Pandemic. So again, I am not here to undermine your uncertainty. I am here to remind you of or maybe reset your intentions. Ask yourself, what are you trying to do? Are you here to just intraday trade some of these moves? There's nothing wrong with that. Or are you trying to actually invest in some of these companies? Because that is what Meta is trying to do. If you are bullish on AI, it makes sense on why you are bullish on Meta. It doesn't mean you have to be over aggressive. Don't overlever yourself. I mean, there's still key principles. You want to stay true to yourself. But in moments like this, I would say that is what I would go back on is I would remind myself, well, what is being done? Why did it sell off? The concern is that it might be overinvesting, but I believe in what it's overinvesting in. And I do agree with Mark and the risk of overinvesting is better than the risk of underinvesting if we want to be one of those big players. And if you're okay with taking that risk, then it makes sense on why you're bullish on Meta. But again, it doesn't mean that it has to pay off. Every investment, every trade comes at some form of risk. It's for you to decide if it's worth taking. And I think when you think about it like that, I think it makes it more clear. Not that, oh yeah, duh, let's buy it. No. Because if your consensus is that you're bearish on this AI boom and this AI bubble and you do think it's going to pop, then you have every reason to be a bear. Let me know what you think about this breakdown. I feel like hopefully it can kind of calm your thoughts and hopefully encourage you to make more of an informed decision and maybe a less impulsive one. Again, I'm very grateful that you guys were able to Holy smokes. This thing is still ripping up higher. It looks like I sold too soon. Surprise, surprise. Again, I'm trading live every single morning and you guys, again, I've been talking about it as markets have been down. As markets are down, so are our prices for LPP 3.0. Some of you guys got to see what it's like to watch me trade live today. I do it every morning at market open privately with our LPP team. We have members that signed up back in 2018. They paid once and they still watch me trade live today. If this is something that you want to do daily, again, there it's no commitment. Like you pay, you have access to it. You join us whenever it is that you want to. But the biggest thing is that you're going to when you show up, you're there and you're, you know, working with us to find intraday opportunities and also planning for our investments. That's something that we're proactively always talking about as markets draw down. So again, if this is something that you want to be a part of, second link in the description down below. The sale will be live as long as markets are down. As soon as markets begin to recover, our price will go back to full price, meaning $6.99. So again, if you want $2.99 off, second link down below, onetime payment, lifetime access, and even before you sign up, if you want to preview a recent live trading session, watch it first so you know exactly what to expect. I trade shares. I don't trade options. I don't trade penny stocks. I don't trade meme stocks. I trade the same boring blue chip stocks over and over again. But guess what? I love trading overbought and oversold reversal and it works for me. And the way that I break it down, it makes sense to other traders. And that's the whole point. Do things that make sense to you and stay consistent with it. And again, if that's something that you want to be a part of, second link down below. I appreciate you guys' time. I hope that we're in a thumbs up. Very excited to see what the markets have to offer tomorrow. And like always, let's make sure that we end the year on a green note. Take care team.