Meta's Q3 Earnings Beat—Is This Dip a Golden Entry Opportunity? Between earnings growth, analyst support, and the strength of the underlying rally, investors have many reasons to be excited about Meta's potential upside.

Meta Platforms Inc. (NASDAQ: META) has, for the most part, enjoyed a stellar year. Shares of the tech titan have been building on a 550% rally that has been underway since October 2022, and there are several reasons to be excited about them heading into next year.

Yet, after posting robust Q3 earnings on Wednesday evening, Meta shares finished down more than 4% in yesterday's session. Headquartered in Menlo Park, California, Meta is, without a doubt, one of the strongest players in the tech space right now.

Their ongoing work in AI and next-gen technology positions them uniquely among peers, and this has been reflected in their share price for over two years now. But with this week's dip in post-earnings, how should investors think about it heading into the rest of the year? Let's jump in and take a look at two trades that are opening up.

Meta's Fundamental Performance

To start with, we'll take a look at the big takeaways from this week's report. On the face of it, Meta smashed analyst expectations for both EPS and revenue, with the latter figure jumping more than 19% year on year. As CEO Mark Zuckerberg noted, "We had a good quarter driven by AI progress across our apps and business. We also have strong momentum with Meta AI, Llama adoption, and AI-powered glasses."

Daily active people on Meta's platforms, always a key metric for them, grew 5% to nearly 3.3 billion per day, beating estimates. While ad impressions somewhat lagged expectations, the average price per ad outperformed.

Bullish Analyst Updates: Golden Entry Opportunity?

For investors who like buying into strong fundamentals, there was a lot to like in Meta's report, and this was built on by analyst updates.

One idea for getting involved is to treat yesterday's dip as a golden entry opportunity, especially as multiple updates in the past few days suggest Meta shares are primed for further gains. The teams at Citigroup, JMP Securities, UBS Group, and Susquehanna all reiterated Buy ratings following the report, with price targets landing as high as $719. From the $568 that Meta shares closed out Thursday, this is implying a solid 30% upside.

Potential Concerns

Yet, at the same time, some caution is justified, especially given the cautious outlook of broader tech. Amazon.com Inc's (NASDAQ: AMZN) 81% capital expenditure jump, paired with Meta's own increased spending, has spooked some investors as it could be years before these companies see the payoff. For context, Meta's capital expenditures are projected to be close to $40 billion for 2024, an increase on previous guidance, with continued spending growth likely in 2025.

This played a large role in the update from the Needham & Company team, who issued a fresh Underperform rating on Meta shares as a result. Off the back of this, a second trade to consider, especially for the more cautious investors, is to wait until the middle of the month to see how the market digests all these tech earnings, as well as the U.S. election.

If you're a believer in Meta's long-term prospects but also love the idea of a bargain, this probably isn't a bad way to go about it.

Getting Involved

Either way, Meta shares are at an interesting place right now, with this week's dip making it a very closely watched stock.

Between earnings growth, analyst support, and the strength of the underlying rally, investors have many reasons to be excited about Meta's upside potential in the coming years. Those with exceptionally bullish outlooks and little patience might want to consider swooping in and taking advantage of this dip, while those who don't mind waiting could well benefit from sitting on their hands for a few more weeks.