Meta Platforms is the IBD Stock Of The Day for Wednesday. Shares of the Facebook parent company have rallied 16.5% in May, helping fuel a rebound for Meta from a deep slump earlier this year. Meta stock is forging a handle for a lower buy point.
There are two clear factors powering Meta stock's recent gains: reductions in tariffs and a stronger-than-expected first-quarter earnings report. Meta rallied more than 8% on May 12 after the Trump administration announced it would cut its 145% tariff on Chinese goods to 30% as part a temporary deal with the Chinese government.
A day later, Trump also said his administration would cut tariffs on small-value parcels shipped from China to 54% from 120%. Packages valued under $800 previously were able to enter the U.S. duty-free under the "de minimis" trade exemption. But Trump suspended that measure on May 2 for shipments for China and replaced the previous 120% tariff on the parcels.
The overall tariffs deal provided a big boost to stocks, with Meta posting some of the biggest gains among Magnificent Seven stocks. The de minimis tariff reduction is a potential relief for Meta because e-commerce platforms that ship from China, such as Temu and Shein, are major advertisers on Facebook and Instagram. Meta CFO Susan Li said the company had seen "some reduced spend in the U.S. from Asia-based e-commerce exporters" when Meta reported first quarter results on April 30.
That was the only blemish for an otherwise strong Meta Q1 report. Meta's earnings and revenue both beat expectations. And the social media giant also guided for faster sales growth in its June quarter than Wall Street was anticipating, shaking off concerns about tariffs and lagging consumer sentiment. Meta stock gained 4% the day after its earnings report.
Meta Chasing Valentine's Day Highs
Wedbush analyst Scott Devitt reiterated an outperform call on Meta stock in a recent client note recapping the Q1 earnings season. "While sentiment had turned cautious ahead of the print, Q1 results were solid and guidance for Q2 revenue growth was encouraging," Devitt wrote on May 16.
Meta stock shed a fraction to close at 635.50 on the stock market today. Shares rallied 8% last week on the tariffs news and are up 10% overall in 2025.
But one point to watch: The Wall Street Journal reported last Thursday that Meta had delayed the rollout of its "Behemoth" Llama AI model. The report said Meta was struggling to improve the model's capabilities from previous versions. Meta stock fell 2.5% the day of the report. Chief Executive Mark Zuckerberg has told investors that Meta expects to spend roughly $68 billion on capital expenditures this year, focused in large part on developing AI-related infrastructure. With that much on the line, Meta's AI progress is closely watched by investors.
IBD MarketSurge shows Meta stock has formed a cup pattern with a 740.91 entry point. That would mark a full recovery to the high Meta reached on Feb. 14, when it was riding a 20-day streak of gains. Tariffs and other concerns pushed Meta to a more than 30% drawdown from that level by mid-April.
However, as of Wednesday's close, Meta stock will have a cup-with-handle pattern with a 662.67 buy point, representing Meta's high last week before it fell on the AI delay news.
A move above Wednesday's intraday high of 646.61 would offer an early entry.
Meta Stock: 96 Composite Rating
The Relative Strength Rating for Meta stock is 83 out of a best-possible 99, down from 91 three months ago. It is also notable that, unlike last year, the current market rally has not been led by the Magnificent Seven stocks.
Meanwhile, Meta stock has an IBD Composite Rating of 96 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
