Meta: Trading Idea closing
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Despite the government crisis, the Romanian stock market is near record highs
Romania has been under a caretaker government since early May, after the Social Democratic Party, together with an opposition party, successfully tabled a no-confidence motion, thereby bringing down the Romanian government. Subsequent attempts to form a government have been unsuccessful, and for now, it is unclear how the government crisis might be resolved. Despite the political uncertainty, the Romanian stock market has performed very well so far this year; the BET index is currently the fifth-best-performing stock index globally. With that in mind, we examined what might happen next in Romania.
Orsted may pay dividend again after several years
Orsted, the Danish renewable energy utility, recently published its Q2 earnings report, which showed mixed results. The company exceeded analysts’ expectations in terms of both revenue and EBITDA, but fell short of net income estimates. Nonetheless, project developments are on track, and the company’s liquidity position remains adequate. In light of the results, management maintains its 2026 guidance, and announced dividend payment plans for 2027. Overall, Orsted keeps making good progress, so we are keeping the stock on our Equity Top Pick List.
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.
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