META Slides 0.6% to $736.59 as Muse Momentum Fades on September 22

Meta Platforms (META) declined 0.6% to $736.59 on September 22, reversing part of a powerful two-day rally that saw shares surge over 11% on enthusiasm over its new Muse AI assistant. The stock remains up 33.95% for the month, but technical indicators now flash warning signs. Meyka grades META a B+ with a 12-month forecast of $765.49, suggesting limited upside from current levels.

Why META pulled back after Muse’s app store win

Meta’s Muse AI app reached the top of Apple’s US App Store, sparking a 11.3% rally on September 21. The surge boosted Mark Zuckerberg’s net worth by roughly $25 billion in a single day as investors bet on the company’s aggressive AI strategy. However, the stock gave back 0.6% on September 22, suggesting profit-taking after the sharp two-day climb. Analyst consensus remains bullish at 3.0 out of 5, with 20 buy ratings and only 9 holds.

Technical signals turn overbought as RSI hits 78

Meta’s relative strength index (RSI) sits at 78.09, deep in overbought territory above the 70 threshold that typically signals a pullback is due. The Stochastic oscillator reads 91.54, and the commodity channel index stands at 163.61, both extreme readings. Meyka’s technical data shows the ADX at 30.52, confirming a strong uptrend, but the overbought momentum indicators suggest near-term consolidation or weakness is likely.

Service outages pile pressure on reliability

Facebook and Instagram experienced outages affecting thousands of users on September 22, marking another disruption for the platform. StatusGator data shows Meta has logged over 1,113 outages since September 2022, with more than 700 users monitoring the service for downtime alerts. Meanwhile, Instagram suspended pages for multiple nightclubs in California without explanation, leaving venue owners unable to reach their audiences and damaging their businesses.

Valuation remains stretched despite AI optimism

Meta trades at a price-to-earnings ratio of 27.74, well above its 10-year average, while Meyka’s DCF and PE scores both signal caution. The stock’s price-to-book ratio of 7.28 reflects premium valuation. Earnings are due October 28, and any miss could trigger sharp selling given the stock’s 34% monthly gain and overbought technicals. Wells Fargo raised its price target to $796 on the AI momentum, but that implies only 8% upside from current levels.

Final Thoughts

Meta’s 0.6% pullback reflects profit-taking after a 11% two-day rally on Muse AI success. With RSI at 78 and analyst consensus already pricing in gains, the risk-reward tilts toward caution near-term. Meyka’s B+ grade and $765 forecast suggest limited room to run before earnings on October 28.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.