Meta: Trading Idea closing
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A long-term turnaround is taking shape at the German biotech company
European markets have reached key support levels thanks to the recent corrections. However, the downturn has not yet given way to a turnaround. This is confirmed by our screening list, which shows few or no promising opportunities. In such a market environment, momentum-based turnaround strategies are typically less effective, which is why, once again, only a few companies met our screening criteria. From the list, we highlighted the German life sciences and biotechnology company Sartorius AG, which develops and manufactures laboratory and biopharmaceutical production equipment, as well as related services. We see a long-term turnaround opportunity, so seeking long positions may be worth considering.
Hungarian Equities - Technical Analysis
The BUX index has begun to show signs of a correction, but there has not yet been any confirmation of a significant change in its structure. MOL’s share price has stabilized above the 5,000 forint level following the dividend payment; a break below this level could pave the way for a deeper correction. Richter broke through the 12,500 forint support level, further reinforcing the downtrend. Magyar Telekom’s share price continues to trade above the 2,500 forint level, though it is being squeezed into an increasingly narrow range below the downtrend line. Opus remains in a downtrend following the formation of a new swing low. Rába’s share price bounced off support around 3,125 forints and continues to maintain the trend-confirming pattern.
In early July we sent a Trading Idea related to Meta shares, as we believed that several announcements had been made that could positively influence investor sentiment toward the company in the short-term. This worked well for a short time, but then the stock fell along with the broader technology sector, partly due to the launch of a new Chinese AI model, the Kimi K3. The company published its disappointing earnings report on Wednesday after the market close amid this weaker market sentiment, causing the stock price to reach our previously set stop-loss level during yesterday’s trading. Accordingly, we are closing our Trading Idea.
The Chinese Kimi K3 model, which made American investors worried was unveiled in mid-July and it was developed by Beijing based Moonshot AI. The new AI model caused concern among investors primarily because it performed very well against its American competitors (e.g., OpenAI, Anthropic) while doing so at a lower cost, which triggered a sell-off in certain technology stocks.
The situation was further complicated by the fact that the weaker performance of technology stocks also put pressure on certain investment funds. For example, Situational Awareness—a hedge fund that had previously performed exceptionally well and managed approximately $45 billion—was forced to sell all of its public stock holdings due to margin requirements (though it retained some of its private equity holdings).
Meta’s disappointing earnings report was released on Wednesday after the market close amid this weaker market environment. The company met expectations in terms of revenue, but profits fell short of estimates, although one-off items also played a significant role in this. Furthermore, the company’s forecast for the current quarter was disappointing and may indicate that the ramp-up in computing capacity sales will be slower than expected. Meanwhile, consistently high investment plans may continue to put pressure on free cash flow generation. As a result, the stock price fell sharply during yesterday’s trading and reached our previously set stop-loss level. Accordingly, we are closing our Trading Idea.
Meta technical picture
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