Is the Worst Over for Meta Platforms’ Stock? The Motley Fool

Meta Platforms’ stock is owned by a variety of institutional and retail investors. Ltd Zurich (30.35%), BlackRock Inc. (6.05%), State Street Corp (3.44%), Geode Capital Management LLC (1.71%), Capital World Investors (1.44%) and Capital International Investors (1.39%). Meta Platforms, Inc. is a US-based multinational technology company and 1 of the Big 5 US tech companies. It is a member of the FAANG group holding the first position with its original name, Facebook. On 26 October 2022, Meta Platforms reported its financial results covering the third quarter of the 2022 fiscal year.

• Meta Platforms revealed at its Q earnings call that on a user geography basis, year-over-year ad revenue growth was strongest in Asia-Pacific and the Rest of the World at 13% and 11%, respectively.
• If Meta controls a quarter of the digital ad market by then, its ad revenue could increase to $196 billion annually, up 70% from last year’s levels.
• Reality Labs develops and markets a line of virtual and augmented-reality products.
• Meta was a $900 billion company when earnings came out; you rarely see stocks this big make such a dramatic move.
• Things are also looking good for META stock considering its outlook for the second quarter of 2023.

If Meta were smaller, or the metaverse were a separate company, it might not attract the same attention. Long-term Meta investors must understand that they are no longer investing in a simple social media company, but are placing a bet on the company’s Reels business and its vision of the metaverse. I think TikTok has a strong hold of the short-form video space, which makes it difficult to envision Reels succeeding in the long run.

Meta is the worst performing FAANG stock this year. Here’s where Wall Street sees it going next

Microsoft’s revenue accelerated from 2% in the December quarter to 7% in its just-reported fiscal third quarter, while Alphabet’s revenue growth improved from 1% to 3% with the help of weakening currency headwinds. 52 Wall Street research analysts have issued “buy,” “hold,” and “sell” ratings for Meta Platforms in the last twelve months. There are currently 2 sell ratings, 5 hold ratings, 44 buy ratings and 1 strong buy rating for the stock. The consensus among Wall Street research analysts is that investors should “moderate buy” META shares.

But many Wall Street analysts are forecasting a strong upward trend in the coming months. At Leads From Gurus, we strive to achieve sweet returns by predicting which companies would report unexpected earnings. If virtual reality and the metaverse become a major part of life over the next decade, Meta is well-positioned to have a huge role in it given its early entry into the space. Etf trader It has fallen significantly from its previous highs but remains a behemoth in the world of social media. That could mean right now is the time for interested investors to buy in at a discount. When the company announced Q1 earnings in February 2022, it made headlines by going through the largest single-day valuation drop in US stock market history, losing $237 billion overnight.

Its stock price started the year just over $120 and rose to a peak around $128. This roughly 6% increase outpaces the S&P 500, which has held relatively steady year-to-date. Since the start of the new year, Meta has seen gains in its stock price, leaving many investors to wonder why. Analysts predict Meta Platforms’ earnings will contract by 10% in 2022 to $12.49 per share, given some of the abovementioned challenges.

Financial Strength

We’ll learn more when Meta releases its first-quarter earnings report after hours today. Analysts are expecting revenue to dip 0.9% to $27.65 billion and for earnings per share to fall from $2.72 to $2.03. The family of Apps includes Facebook and all the other digital applications.

Second, Meta’s Reality Labs segment, responsible for developing the metaverse, lost a whopping $10 billion in 2021. It raised questions about how much the company would need to invest in the new, virtual world before seeing a return. But the organization did rebrand from Facebook to Meta Platforms to reflect its focus on this project, so substantial financial commitments shouldn’t come as a surprise. Given this, the long-term return of its stock is likely to be higher than its business growth. Meta Platforms Inc, the world’s largest online social network, boasts 3.8 billion monthly active users across its family of apps.

Meta shares pop 5% as Wall Street rallies around layoffs

Investors may also be intrigued by the company’s investment in technologies like the metaverse. Though it has been, thus far, largely panned, there’s no telling what the future holds, especially when it comes to technology. The company has also gone all-in on its vision for the metaverse, a virtual reality world. Facebook’s Horizon Worlds launched in August 2022 and was almost universally panned by the internet. The company’s name change from Facebook to Meta suggests it plans to focus on the service going forward.

© 2023 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart’s disclaimer. One share of META stock can currently be purchased for approximately $300.15. Sign-up to receive the latest news and ratings for Meta Platforms and its competitors with MarketBeat’s FREE daily newsletter.

The stock’s huge post-earnings drop could be a great buying opportunity, depending on what you make of Q4 2021 results.

On top of that, during the last earnings call, CEO Mark Zuckerberg pointed out that TikTok’s short video format remains a threat to Meta since the TikTok app competes with Meta for user screen time. Although Meta retaliates with Reels, its own short video product, there is no guarantee that it can effectively counteract TikTok’s rise. Even if Reels proves to be useful in retaining users, it will be a long time before Meta can monetize it. We don’t suggest other companies go down the route of Meta and miss on earnings estimates. Investors have long loved Meta for its ability to print money but soured on the name in 2022 amid slowing sales and fresh restructuring efforts. But they may now be willing to overlook the quarterly shortfalls (see revenue weakness and ballooning Reality Labs losses) on signs of better profits ahead.

What Meta needs now is not another confusing feature, but a way to encourage creators to create high-quality content. Although Meta has attracted high-quality content creators in the last few years, YouTube easily dominates this category. Meta Platforms, to remain relevant, will have to up the ante by rewarding content creators handsomely and competitively.

Here’s How Much Meta Stock Could Surge Thanks To Twitter Rival Threads

But that’s expected to reverse quickly, with a return to growth in 2023 that should leapfrog its 2021 earnings result. The metaverse can potentially change the way we interact socially and even how we do our jobs. Meta Platforms envisions users existing as virtual avatars of themselves, surrounded by a self-sustaining digital economy that could feature all the popular brands we engage with in the real world. But the company has also been consistently profitable in that stretch, which sets it apart from many other technology outfits. It generated $0.46 in earnings per share in 2011, which ballooned to $13.77 last year — and that’s what makes Meta Platforms stock so cheap right now. “From a business perspective Meta outlined opportunities for AI enabled ad content creation and automated customer service using Meta’s messaging platforms,” wrote the analysts, who have a buy rating on the stock.

The market’s reaction doesn’t seem to think so, but things might not be what they seem. Here are three major takeaways from the quarter that could clue investors in on whether Meta is a buy or not. For instance, we are still unclear when the metaverse will reach the mainstream or what business model is best suited for this sector. Besides, the sector still has to solve complex regulatory and ecosystem issues in the coming years. It will take plenty of partnerships, talents, billions of dollars of investments, and many years (if not decades) before we have more clarity on the real prospects of this industry.

Why Meta Platforms Stock Was Up Today

For the most part, investors have been jumping on Meta’s cost-cutting story and two rounds of job reductions, which began in November and are continuing in the first half 2023. In February, CEO Mark Zuckerberg said this would be the company’s “year of efficiency,” a declaration that sent the stock up over 20%. If META merely sustains its current forward earnings multiple of 21, it may not take long for the stock to re-hit past all-time highs, hit during 2021. In the event the company beats the high end of expectations, and experiences some multiple expansion, hitting $400, $450 or perhaps even $500 per share within the next two years could be within reach. This would undoubtedly benefit Meta Platforms, both in terms of market share and revenue.

The company is still the dominant social media company globally, with 2.8 billion daily active users across its family of apps. For perspective, this business made $57 billion in operating income in 2021. Even if growth slows down (which is inevitable, given the company’s size), it’s not https://investmentsanalysis.info/ the end of the world. It is too early to declare that Meta’s strategic pivot toward the metaverse industry is wrong. After all, the management team led by Meta’s founder has a solid track record of vision and execution, which led to its current dominance in the social media industry.