Shares of Meta (META) are trading higher ahead of the company’s second-quarter earnings release.
Meta stock is up around 1% in midday trading on Wednesday, but it could see returns spike during the overnight trading session following the company reporting second-quarter earnings after the bell.
Investors with leveraged exposure to Meta’s overnight trading session will see particularly strong returns if the company reports rosy earnings. Revenue growth during the quarter is expected to increase to about 8%, according to analysts expectations.
The NightShares 500 1x/1.5x ETF (NSPL) provides exposure that corresponds to 1x the day performance of the S&P 500, in which Meta is a top-seven holding, and 1.5x the portfolio performance at night, capturing overnight returns.
It’s important that investors don’t overlook exposure to the night session, as many key macro and earnings updates are released during the post-close (between the closing bell and midnight) or the pre-open (between midnight and the opening bell).
Furthermore, 95% of public companies in the U.S. announce their quarterly earnings during the overnight trading session. Typically, with few exceptions, strong earnings result in the stock price increasing, while the price may fall on disappointing earnings.
Overnight Returns Influenced by Macro Updates
A similar pattern was observed during the last CPI release. Stocks rallied during the overnight session on July 12 as the Consumer Price Index came in below analysts’ expectations. Wall Street celebrated as the report showed that inflation eased last month to its slowest pace in over two years.
See more: “Stocks Jump During Overnight Session as CPI Shows Cooling Inflation”
The highly anticipated monthly CPI reports are released before market open, triggering positive returns in the overnight session. Notably, there was very little movement in the daytime session, as all gains came in before markets opened.
At market close on July 12, large-caps, as measured by the SPDR S&P 500 ETF Trust (SPY), were up 0.8%. The night contributed 0.9% of performance, while the day session declined 0.1%, according to the NightWatch Mobile App.
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