Source: PaxForex Premium Analytics Portal, Fundamental Insight

Meta Platforms shares rose more than 25% last month, as per the data provided by S&P Global Market Intelligence. In short, the company took steps during the month to enhance its earnings, and the market appreciated it. In the end, the company's stock fell more than 75 percent from its highs because its ambitions to create a metaverse in the first place led to lower profit margins.

The company's stock hit an all-time high in September last year, less than two months before announcing its decision to change its name to Meta Platforms. By changing the company's name, management announced its priority of developing a digital, interactive world: the metaverse.

Within the past 12 months, Reality Labs, Meta Platform's metaverse development arm, has generated $2.3 billion in revenue. But Reality Labs' operating losses are an astronomical $12.7 billion. And these huge losses coincide perfectly with the free-fall in Meta Platforms' stock.

The company's stock climbed at the beginning of November when Mark Zuckerberg announced that the company was laying off 11,000 employees. It's hard to see this as a good thing for the company since real people and their lives were affected. But the market is profit-oriented, and Zuckerberg's announcement pointed to an improvement.

These weren't just layoffs. Zuckerberg wrote, "We are also taking a number of additional steps to become a leaner and more efficient company."

Reportedly, some of these additional steps for Meta Platforms include phasing out some hardware products, including smartwatches. According to the agency, the company has also given up renewing some leases in New York, which has also saved money.

All of these moves help bolster Meta Platforms' profitability, which is why the company's stock rose in November. At the same time, the S&P 500 was up 5 percent -- a good month for the market average -- which also contributed to Meta's rise.

Before getting too happy about the company's cuts, investors should keep in mind that next year will still be an expensive one for Meta Platforms. Especially, regarding Reality Labs, company management said, "We expect Reality Labs' operating losses to increase significantly next year YoY."

Meta Platforms remains fully committed to its metaverse strategy - consequently the expected increase in operating losses next year. The biggest problem with this strategy is the recent decline in segment revenue. Reality Labs' Q3 revenue of $285 million is down 49% from a year ago.

Investors should keep an eye on Meta Platforms' Reality Labs' revenue in the coming quarters. Management has explicitly said it expects losses to continue, even though it is cutting costs in some areas. Accordingly, investors should not expect the pursuit of the metaverse to be profitable just yet.

We can only hope that shareholders will be rewarded with at least an increase in earnings. If not, it's only fair to question Meta's strategy for the future.

As long as the price is above 107.00, follow the recommendations below:

• Time frame: D1
• Recommendation: long position
• Entry point: 113.55
• Take Profit 1: 125.00
• Take Profit 2: 139.00

Alternative scenario:

If the level of 107.00 is broken-down, follow the recommendations below:

• Time frame: D1
• Recommendation: short position
• Entry point: 107.00
• Take Profit 1: 94.00
• Take Profit 2: 87.00