Last week Meta Platforms stock (the parent company of Facebook) started to drop significantly. The fourth quarter earnings did not meet expectations and as a result it ignited a sell off. The stock has dropped around 30% this month. Historically this stock has performed well. It is widely considered one of the top tech stocks to own. Is Meta Platforms stock a good buy now is the question? When it comes to the stock market, seasoned investors will tell you to buy low and sell high.
There is a principal in investing called buying the dip. What does this mean? Buying the dip simply means an investor purchases a stock that normally performs well when it declines in hopes to make money when the price rises again. The challenge with buying the dip is timing. How do you know how low the price will drop? There is no way to know exactly the lowest price a stock will drop to. Based on research one can only estimate.
When buying the dip it is possible to lose money for a while if the stock continues to decline before it rises. There is also a possibility the stock will not rise again. The worse case scenario is if you buy the dip and the stock drops further and never rises. Obviously if a stock is purchased at the bottom of the dip the investor can benefit the most depending on if it rises again and how high it rises to.
Should you buy the dip on Meta Platforms? This is a good question to ask your financial advisor. Pay close attention to what analysts are saying about Meta Platforms and then you can make an informed decision on whether or not to purchase.
