Meta Shares Fall for Ninth Straight Day as Q2 Earnings Loom; Can They Rebound?

TradingKey - Meta's stock price rebounded slightly on the eve of its earnings report, but if capital expenditure is revised upward further, the stock price will continue its decline.

On July 29, Eastern Time, Meta ( META) rebounded slightly, rising 0.64% to temporarily trade at $597.21. Over the past nine trading days, Meta's stock price has suffered immense selling pressure, falling continuously from above its high of $680, with a cumulative decline of over 12% to date, dragging down its overall performance for the year.

The underlying reason for the continuous decline in Meta's stock price is not an inability to sell ads, but rather that it is spending too much money. Meta's guidance shows that its full-year CapEx guidance for 2026 was significantly revised upward to $125 billion – $145 billion, accounting for nearly 50% of revenue, the highest among the Magnificent Seven and far higher than Alphabet ( GOOG ), Microsoft ( MSFT) and Amazon ( AMZN) and other tech giants.

This spending pattern has eroded Meta's free cash flow (FCF) and operating margin. To expand data centers and purchase expensive AI chips/memory, META's operating margin has decreased from its peak of 48% to approximately 41%. Investors worry that the return on investment (ROI) for AI will take too long to materialize, thereby causing cash flow to contract severely.

During today's after-hours session, Meta will release its second-quarter earnings report, and the market is highly focused on whether its CapEx will be further revised upward. If the spending guidance gets out of hand again, it could trigger a secondary sell-off in the short term, testing this year's low of $520 once more; if CapEx remains unchanged and next quarter's guidance is moderate, the market may interpret the current sell-off as overblown panic, boosting the stock price to rebound slightly.

Although Meta's capital expenditure is under close market scrutiny, it only determines whether things will worsen further, whereas what truly determines a major improvement is core advertising. If Q2 ad revenue demonstrates robust resilience far exceeding expectations, proving that AI has substantially driven advertising revenue, it will inject a shot in the arm for the stock price.

Since hitting a new high in August 2025, the rebound highs and decline lows of META's stock price have been continuously falling, forming a symmetrical triangle that is nearing the apex of the pattern, indicating that a trend breakout is drawing closer. If the upcoming earnings data is mediocre, META's stock price is likely to continue fluctuating narrowly around $600; if it beats expectations, Meta's stock price is expected to break out upward to challenge $700, and conversely, break downward.

META Stock Price Chart, Source: TradingView