Meta Plummets 2.4% Amid Metaverse Cuts and AI Shift—Is This the Start of a New Downtrend?

Summary
• Meta’s stock slumps to a 13-month low of $624.1 amid mass layoffs in Reality Labs
• 52-week price range narrows to $624.1–$796.25 as turnover surges 0.42%
• Leveraged ETFs like FBL and METU drop 4.7% as bearish sentiment intensifies
• Sector leader Microsoft (MSFT) declines 1.79%, amplifying tech sector jitters

Meta’s sharp intraday decline has ignited a firestorm of speculation about the tech giant’s strategic pivot from metaverse to AI. With the stock trading 2.39% below its previous close and key technical indicators flashing bearish signals, investors are scrambling to decipher whether this is a short-term correction or a structural shift in market sentiment. The move coincides with a broader tech sector selloff, as Microsoft’s 1.79% drop underscores growing concerns about AI-driven cost-cutting and regulatory scrutiny.

Metaverse Cuts and AI Overhang Trigger Investor Exodus
Meta’s 2.39% intraday plunge is directly tied to its announced 10% workforce reduction in Reality Labs, the division responsible for its metaverse ambitions. The move, coupled with the establishment of Meta Compute for AI infrastructure, signals a strategic retreat from high-cost metaverse projects toward AI-driven monetization. While the company’s pivot aligns with broader industry trends, the abruptness of the layoffs has spooked investors, who fear reduced R&D spending and delayed product cycles. Additionally, the lack of concrete AI revenue milestones in the news releases has amplified uncertainty, with the stock now trading 24.7% below its 52-week high of $796.25.

Tech Sector Sinks as Microsoft’s 1.79% Drop Amplifies Meta’s Pain
The Software & Services sector is under pressure as Microsoft’s 1.79% decline mirrors Meta’s bearish momentum. While Microsoft’s Fabric AI platform and Azure growth remain robust, its drop suggests broader investor caution about AI-driven cost-cutting narratives. Meta’s 2.39% loss outpaces the sector’s average, reflecting its unique exposure to metaverse skepticism and AI monetization doubts. The divergence highlights Meta’s precarious position as a bellwether for tech’s next frontier.

Bearish Playbook: ETFs and Options to Capitalize on Meta’s Downtrend
• 200-day average: $674.99 (above) • RSI: 39.92 (oversold) • MACD: -0.66 (bearish) • Bollinger Bands: $640.46 (lower band) • Turnover rate: 0.42% (elevated)

Meta’s technicals paint a bearish picture, with the stock trading near its 200-day average and RSI hovering in oversold territory. The 52-week range of $479.8–$796.25 suggests a potential rebound to $650–$670, but near-term support at $624.1 (intraday low) and $640.46 (lower Bollinger Band) remains critical. Leveraged ETFs like FBL (-4.7%) and METU (-4.72%) offer aggressive short-side exposure, though their high leverage ratios (59.14% and 95.71%) demand caution.

Top Option 1: META20260123C630
• Code: META20260123C630 • Type: Call • Strike: $630 • Exp: 2026-01-23 • IV: 27.01% • Leverage: 59.14% • Delta: 0.477 • Theta: -1.54 • Gamma: 0.0135 • Turnover: $2.35M
• IV: 27.01% (moderate) • Leverage: 59.14% (high) • Delta: 0.477 (moderate sensitivity) • Theta: -1.54 (rapid time decay) • Gamma: 0.0135 (strong price sensitivity)
This call option offers a high leverage ratio and moderate delta, ideal for a 5% downside scenario. A 5% drop to $595.31 would yield a payoff of $34.69 per contract, though theta decay (-1.54) requires swift execution before expiration.

Top Option 2: META20260123C640
• Code: META20260123C640 • Type: Call • Strike: $640 • Exp: 2026-01-23 • IV: 26.70% • Leverage: 95.71% • Delta: 0.345 • Theta: -1.22 • Gamma: 0.0127 • Turnover: $2.43M
• IV: 26.70% (moderate) • Leverage: 95.71% (extreme) • Delta: 0.345 (low sensitivity) • Theta: -1.22 (moderate decay) • Gamma: 0.0127 (strong sensitivity)
This contract’s 95.71% leverage ratio makes it a high-risk/high-reward play. A 5% drop to $595.31 would generate a $44.69 payoff, but its low delta (0.345) means it’s less responsive to price swings. Aggressive bulls may consider FBL (-4.7%) into a bounce above $640.

Backtest Meta Stock Performance
Meta Platforms (META) has demonstrated a positive performance following intraday plunges of -2% or more since 2022. The backtest data reveals that the 3-day win rate is 54.55%, the 10-day win rate is 57.44%, and the 30-day win rate is 64.05%, indicating a higher probability of positive returns in the short term after a significant drop. The maximum return during the backtest period was 8.34%, which occurred on day 59, suggesting that META can deliver substantial gains in the months following a steep intraday decline.

Bullish Bounce or Bearish Breakdown? Key Levels to Watch Now
Meta’s 2.39% drop has created a critical inflection point, with support at $624.1 and $640.46 (lower Bollinger Band) acting as immediate hurdles. A break below $624.1 could trigger a test of the 52-week low at $479.8, while a rebound above $640.46 may reignite AI-driven optimism. Investors should monitor Microsoft’s (-1.79%) performance as a sector barometer. For now, FBL (-4.7%) and META20260123C630 offer the most compelling bearish exposure, but only if $624.1 holds. Watch for a $640.46 breakdown or regulatory reaction to the AI pivot—either could define Meta’s next move.