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How to Short Meta Stock [2024] | Step-by-Step

How to Short Meta Stock [2024] | Step-by-Step
Bogdan Stojkov

Summary: Shorting stocks can be a profitable strategy, but it’s essential to understand the risks involved and execute the trade carefully. That said, the most convenient way to short Meta stock (NASDAQ: META) is via a reputable brokerage platform like eToro.

Highly Rated Stock Trading & Investing Platform

  • Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.

  • 0% commission on buying stocks - buy in bulk or just a fraction from as little as $10.

  • Copy top-performing traders in real time, automatically.

  • Regulated by financial authorities including FCA and FINRA.

2.8 Million Users
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

About Meta

Meta homepage. Source: about.meta.com

Formerly known as Facebook, Meta Platforms, Inc. is a multinational technology conglomerate headquartered in Menlo Park, California. It’s best known for its social networking platforms Facebook and Instagram, as well as other products and services related to virtual reality, augmented reality, and artificial intelligence.

If you’re interested in the metaverse aspect of Meta, take a look at our Top 5 Metaverse Stocks guide.

What is short selling?

Short selling (shorting) is a trading strategy where an investor borrows shares of a stock from a broker and sells them on the market with the expectation that the stock price will decrease. The investor aims to buy back the shares at a lower price, return them to the broker, and profit from the difference.

Traditional shorting

In traditional shorting, an investor borrows shares from a broker and sells them on the open market. If the stock price drops as anticipated, the investor buys back the shares at the lower price, returns them to the broker, and pockets the difference as profit.

What are financial derivates?

Alternatively, investors can short stocks using derivatives such as options, swap contracts, and futures contracts. These financial instruments allow investors to bet on the price movements of a stock without owning the underlying asset.

How to short Meta stock: Step-by-step

In case you’re looking to short Meta stock, feel free to follow our step-by-step guide in the section below.

Step 1: Choose the right broker

The first step in shorting Meta stock is to choose a reputable broker that offers short-selling services. Our chosen platform is eToro—a leading online trading platform known for its user-friendly interface and wide range of financial products, such as CFDs (not available in the US) and options.

  • Commission-free stock trading;
  • Access to over 2,000 stocks from 17 different exchanges;
  • Limited margin accounts;
  • Charting tools;
  • A user-friendly platform that simplifies the trading experience.

Highly Rated Stock Trading & Investing Platform

  • Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.

  • 0% commission on buying stocks - buy in bulk or just a fraction from as little as $10.

  • Copy top-performing traders in real time, automatically.

  • Regulated by financial authorities including FCA and FINRA.

2.8 Million Users
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

Step 2: Fund your account

Once you’ve selected a broker, you’ll need to fund your trading account. This usually involves transferring funds from your bank account to your brokerage account. Nevertheless, make sure to follow the broker’s instructions for depositing funds.

Step 3: Open a short position

Next up, go to the Meta stock page on your selected platform and click on Trade. Determine the expiry date and strike price for your option. Assess the option’s pricing, risk factors, and other pertinent metrics displayed on the selection page. Then, determine the number of 100-share contracts you wish to purchase.

Afterward, thoroughly review the details of your trade and swipe up to confirm the purchase. If you’re uncertain, you also have the option to save it as a draft before finalizing the transaction.

Step 4: Manage your option

Once you’ve made the purchase, you have the option to hold onto it until expiry, with the potential to profit if the stock moves in the expected direction. However, if the market doesn’t align with your predictions, your option might close with a partial loss or expire without value.

If you’d rather not wait until expiry, you can sell your option on the market. Simply go to your ticket, select an order type (market, limit, or trigger), and if you choose a limit order, set your conditions. Then, you’ll need to wait for a buyer to execute the transaction.

Warning

The key to making money with options is thorough market analysis, a well-thought-out trading strategy, and risk management. Options can be complex and carry a high level of risk, so they’re not suitable for all investors.

Pros and cons of shorting Meta stock

Pros

Pros

  • Profit from downward movements: Shorting Meta stock allows you to profit from declines in the stock price;
  • Portfolio diversification: Short selling can provide diversification benefits by allowing you to profit from both bull and bear markets.
Cons

Cons

  • Unlimited risk: Unlike buying a stock, where your losses are limited to the amount you invested, short selling has unlimited risk since there’s no cap on how high a stock’s price can go;
  • Potential for margin calls: If the stock price rises instead of falls, you may be required to deposit additional funds into your brokerage account to cover potential losses.

If you’re looking to short stocks of other popular companies like Meta, feel free to check out our guides on the following:

Common mistakes when shorting stocks

Short selling can be risky, especially if you’re not ready for the possibility of unlimited losses; hence, underestimating risk is one of the most common mistakes when going short. Still, it’s not the only one, and you should be aware of:

  • Failing to set stop-loss orders: It’s essential to set stop-loss orders to limit potential losses and protect your investment;
  • Ignoring market trends: Shorting against the trend of the overall market can be risky. It’s essential to consider market sentiment and trends before shorting a stock.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

FAQs about how to short Meta stock

Can I short Meta stock without a margin account?

No, you typically need a margin account to engage in short selling. eToro offers limited margin accounts which will allow you to short Meta stock.

How do I know when to cover my short position?

Monitoring the stock price and setting stop-loss orders can help you determine when to cover your short position.

Yes, short selling is legal in most financial markets, but it’s essential to understand the rules and regulations governing short selling in your jurisdiction.

Highly Rated Stock Trading & Investing Platform

  • Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.

  • 0% commission on buying stocks - buy in bulk or just a fraction from as little as $10.

  • Copy top-performing traders in real time, automatically.

  • Regulated by financial authorities including FCA and FINRA.

2.8 Million Users
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

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