Meta Announces Zuckerberg-Favorable Stock Split: Here’s Our Game Plan
Meta’s 2-for-1 split comes with a catch. Here’s what to know and how I’m playing it.
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Meta Platforms (META) provided a new twist to shareholders this week, revealed in an information statement filed with the SEC.
Meta announced plans for a 2-for-1 stock split, effective January 19. Here’s the catch: existing holders of class A and class B shares will receive new class C shares. The new C shares do not have voting rights.
A 2-for-1 stock split creates no value. It’s similar to exchanging a ten dollar bill for two fives. Meta shareholders will have twice as many shares, each valued at half the pre-split price.
Power at the Top
Thanks to the introduction of the class C shares, shareholder voting rights will be diluted. By endorsing this split, Meta shareholders are allowing co-founder and CEO Mark Zuckerberg to consolidate power.
SpaceX (SPCX) shares are set up in a somewhat similar fashion. SpaceX A shares, which are held by the public, receive one vote per share. The B shares, mostly controlled by founder and CEO Elon Musk, receive 10 votes per share, while C shares have no voting rights.
Charting Meta Platforms
Meta’s recent double top (1-2) projected the share price to the $650 area, where it closed on Thursday. Friday’s pre-market activity has the stock at $642, after a 0.5% decline in S&P 500 futures.
There are two areas of potential support nearby:
The first is a gap left over from September 9 (point A). This creates support at $625, if the price falls to that level. The second is Meta’s 200-day moving average, which comes in at $632 (point B).
Earnings and Guidance
Meta’s earnings topped estimates, coming in at $3.83 per share. Analysts were looking for $3.57.
That figure would’ve been much higher if not for a legal settlement that cost the company nearly $10 billion. Revenues of $64.6 billion were about 2% higher than expected.
Meta projects current quarter revenue at around $74.5 billion, slightly better than Wall Street estimates. Capital expenditures are expected to reach about $140 billion for 2026.
Analyst Actions
Analysts responded positively to Meta’s earnings report. Barclays raised its price target to $880 from $780, while maintaining its overweight rating on the stock. RBC raised its target to $800 from $770.
In a largely symbolic move, Wells Fargo reduced its target to $995 from $1,000, citing concerns about capital expenditures.
Bottom Line
We’ve opened a small long position in Meta at $642, and will add to it if the stock declines to $625. If support doesn’t hold in that area, we’ll close the trade.
At the time of publication, Ponsi was long META.
