When we think of the big names in tech, Meta Platforms (META) obviously comes to mind—it was even quick to come to mind before it changed its name from Facebook… Remember “FAANG” stocks?
META has a great track record and is at the forefront of tech innovations today. As with most successes, though, META presents investors with various pros and cons, and one tends to outweigh the other.
While the allure of a high-stakes cage fight between big-time CEOs Elon Musk (TSLA) and Mark Zuckerberg (META) might capture our attention, we should ignore the quick headlines and instead focus on business performance. How the balance sheet looked last quarter always matters.
Looking at META’s overall performance before being swayed by market trends is prudent. Having the most precise understanding of our portfolio options can only maximize future profits…
What are META’s downsides?
It’s worth acknowledging that the current valuation of Meta Platforms could be stretched, making the stock appear overvalued in price. META’s P/E (price to earnings) ratio is about 33.2x, which contrasts with the overall sector; however, its forward-looking pricing ratios are looking brighter. I bring attention to META’s valuation discrepancy because that’s what I, for example, would tend to look at early on when reviewing stocks, and such a thing can sway investors from consideration. As with META, there’s always more going on underneath. For example, despite the elevation in META’s market capitalization throughout much of 2023, its stock price has managed to sustain its upward trajectory. It could’ve been worse.
META’s current price within its 52-week range:
What are META’s upsides?
It should be noted that META, amidst its progressive success with Facebook and Instagram, looks like it might have a concern on its hands regarding its “Threads” short-form message app. Tech analysts have highlighted the fact that Threads is facing the challenge of being late to the party, as I’ll put it. META has to contend with the pressure of carving a niche for itself in the presence of already established and
accomplished competitors such as X (formerly Twitter) and TikTok. Not only is that an issue, but META has to take Threads and essentially go above and beyond what’s already been achieved with Instagram’s expansion. To put it plainly, Threads really, really needs to prove itself. That’s a tall order. Optimism continues to linger, however, due to a little thing called AI.
While acknowledging the downsides and the “bearish” perspective on META stock, investors should remember that the hype might just be real. It’s now crucial to highlight the robust bullish case favoring META, which ultimately seems to win out against its pessimistic counterpart.
META CPO (Chief Product Officer) Chris Cox has affirmed a proactive approach by exploring the use of more “retention-driving hooks” to enhance a user’s engagement with Threads. One example of this would be integrating the ability to enable Instagram and allowing users to access critical Threads content more efficiently. That being said, I think it remains premature to brand META’s Threads as unsuccessful.
META continues to derive substantial revenue streams from Instagram, Facebook, and WhatsApp. Its growth potential extends to the metaverse segment, encompassing sales of VR (virtual reality) headsets. It’s also crucial to point out that META is resolute in its pursuit of advancements in AI technology. Analysts are pleasantly hopeful, too, as many anticipate the introduction of innovative generative AI capabilities across all of META’s apps by September of this year. Whether or not we have another brand of ChatGPT with a few extras remains to be seen. The aforementioned “pros” or “upsides” all help bolster META’s viability as an investment opportunity. Let me try to put a spotlight on that:
META’s 1 year performance chart
META’s stock performance has absolutely lived up to the hype surrounding it. Currently, META is up year-to-date by a whopping 138.22%, with a positive 20/200 day SMA (simple moving average) and significant TTM (trailing twelve-month) growth in momentum and assets—82.63% and 21.74%, respectively. At its Q2 2023 earnings call, META exceeded analysts’ projections, reporting EPS of $2.98 per share vs. $2.89 per share as expected and revenue of $32 billion vs. $31 billion as expected. META also posted year-over-year growth in revenue (+11.02%), net income (+16.46%), EPS (+21.14%), net profit margin (+4.91%), and operating income (+21.70%). META boasts a PEG (price/earnings to growth) ratio of 0.89x and a low 14.78% D/E (debt to equity) measure. With a free cash flow of $55.5 billion and a 10-day average volume of 18.76 million shares, META has a median price target of $380, with a high of $435 and a low of $238; this suggests the potential for an almost 52% jump from where its price sits currently. META has 20 “strong buy” ratings, 32 “buy” ratings, and 5 “hold” ratings.
This “peeing car” is at the center of an $11.7 trillion energy revolution
Goldman Sachs says this will be 10X bigger than the electric vehicle market.
Elon Musk terrified. Tesla could be finished. But early investors could make a fortune.
[Click here to learn more. >>]