FB Braces for Worst Day on Record After Earnings

The stock opened at its lowest level in over a year

Deputy Editor
Feb 3, 2022 at 9:58 AM
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*Update*

Subscribers to Schaeffer's Weekend Player service just scored a 391.4% profit in just under a month with the Meta Platforms April 14, 2022 300-strike put. 

It's been a slippery slope for Facebook-parent Meta Platforms Inc (NASDAQ:FB), which just opened at its lowest level since January 2021, bringing the stock's year-to-date deficit to 28.2%. The social media mainstay not only reported fourth-quarter profits below analysts' estimates, it warned of several obstacles it expects to face during the current quarter, which includes inflation and supply chain issues. Because of this, FB issued a first-quarter forecast that falls between $27 and $29 billion, missing analysts' expectations on that front, too. Meanwhile, the company's fourth-quarter revenue topped expectations, while its daily active user (DUA) numbers missed the mark. 

The stock was last seen down 23.3% at $247.99, and should these losses hold, it could mark FB's biggest daily drop on record. On top of this, the security is set to snap a four-day win streak, which lost steam near the 40-day moving average -- a trendline that helped guide it to a record high of $253.50 back in September of last year. 

At least 13 analysts have slashed their price targets so far, including Wedbush all the way to $270 from $325. This put the 12-month consensus price target at $366.91 -- a $47.9% premium to last night's close. More bear notes could be on the way, though, as 21 of the 24 in coverage call FB a "buy" or better. 

Meanwhile, a bearish shift was already taking place in the options pits. While calls still outnumber puts on an overall basis, the equity's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the 85th percentile of its 12-month range. In other words, long puts have been unusually popular of late. 

These traders are chomping at the bit for a piece of FB's post-earnings plummet. Already, 208,000 calls and 191,000 puts have exchanged hands, which is 11 times the intraday average. The most popular contract is the weekly 2/11 240-strike call, followed by the weekly 2/4 240-strike put, with positions being opened at both. 

 




 
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