Meta nears key risk levels after earnings-driven sell-off

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Meta nears key risk levels

Highlights

Meta stock drops 14.5% from its Oct. 13 peak of $762.50 to $643, underperforming the S&P 500's 1.5% decline after earnings.
Meta's Q3 revenue rises 26% to $64.6 billion and EPS hits $7.40, but negative free cash flow of $2.1 billion and capex guidance of $135–$145 billion weigh on sentiment.
Cloudflare recovers to $326 after a 19% decline, maintains an uptrend with the 50-day average rising, and daily AI agent requests up over 1,700% year over year.

Key levels emerge after Meta earnings reaction

As reported by CNBC, Ritholtz Wealth Management CEO Josh Brown says Meta’s recent chart action leaves no new trade for short-term traders unless the stock can reclaim higher levels after the earnings sell-off.

Meta, which operates Facebook and Instagram, was highlighted on Sept. 28 with the stock at $752 after a strong run from its August low. Since then, the shares have fallen 14.5%, compared with a 1.5% decline for the S&P 500, after peaking at $762.50 on Oct. 13 and sliding to $643.

Third-quarter revenue rises 26% to $64.6 billion, ahead of analyst expectations of $63.3 billion, while fourth-quarter revenue guidance of $73 billion to $76 billion is broadly in line with forecasts. Operating income falls 37% to $13.0 billion because of a $9.89 billion charge tied to a settlement with state attorneys general, though excluding that item, operating income grows 11% and earnings per share reach $7.40.

The main pressure point is cash flow. Third-quarter capital expenditure reaches $34.9 billion, full-year capex guidance moves to $135 billion to $145 billion, and free cash flow turns negative $2.1 billion from positive $10.6 billion a year earlier.

Brown says the previous trader stop at $685 was broken when the stock opened at $676 on Oct. 22, while the 50-day moving average now sits overhead at $664. He identifies $664 as the level Meta has to reclaim to improve the setup, while investors are still anchored to $626, with a weekly close below that level signaling that the Muse gap is filled and the prior trading range is back in control.

Cloudflare trend holds despite software volatility

Cloudflare presents a stronger technical picture, according to the column, even after a volatile stretch in richly valued software and AI-related stocks. The company, which runs a global network and sells security and developer tools, was featured on Sept. 21 near $324 and has returned 0.7% since then.

The stock climbs as high as $361 by Oct. 9 before dropping 19% to $292 by Oct. 20, then recovering to close at $326. Brown says that pullback does not break the broader uptrend, pointing to a pattern of higher highs and higher lows since the spring, with the 50-day moving average continuing to rise underneath the stock.

Cloudflare’s AI-related traffic growth remains part of the investment case. Management says non-human traffic exceeds 50% of the network in the second quarter, with daily AI agent requests up more than 1,700% year over year, though valuation remains a central concern as the stock trades at about 260 times the midpoint of this year’s non-GAAP earnings guidance.

For traders, Brown sets $299 as the stop level, describing it as the point that confirmed selling had stopped after the Oct. 20 reversal candle. For investors, he points to $285 as the key higher low, with a weekly close below that mark breaking the uptrend sequence and changing the technical picture materially.

In our earlier article on the S&P 500’s pullback during earnings season, we noted that the index slipped even as tech and AI-linked stocks rebounded on major results, keeping traders focused on big-cap tech signals. The analysis highlighted broader selling pressure with SPX trading below its 20- and 50-day moving averages, and emphasized that a decisive break above resistance near 7,699 or below support around 7,678 could set the next short-term trend.

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