With a relatively significant price increase over the past few weeks, Meta Platforms, Inc. (NASDAQ:META) has been the NASDAQGS’s top gainer. We might anticipate that any price-sensitive announcements have already been taken into account by the stock’s share price because so many analysts cover the large-cap stock.
What happens, however, if there is still time to make a purchase? To determine whether the opportunity is still there, let’s examine Meta Platforms’s outlook and value based on the most recent financial data.
The metaverse’s future is still unclear. The stock price of Meta is fair. The company’s shares will probably decrease in value more than the market as a whole if the market is bearish.
What’s Happening With META Stock?
META stock was affected by the selloff in technology stocks that occurred last year. Alarmingly, Meta Platforms shares lost 64% of their value in 2022, versus around 19% for the S&P 500.
Meta Platforms was among the S&P 500’s worst performers last year, but oddly enough, a JPMorgan (NYSE:JPM) survey of investors indicates a high level of optimism.
In fact, 41% of the survey’s respondents identified Meta Platforms as the “company they expect will perform the best this year,” according to For investors with a contrarian mindset, this should raise red flags.
Maybe you agree with Zuckerberg’s plan for Meta Platforms to fully embrace the metaverse. Or maybe you think that soon, spending on digital advertising will increase. However, these bets are risky. Prior to making a wager on META stock, cautious investors should wait for more data to be released.
What’s the Opportunity in Meta Platforms?
My valuation model suggests that the stock is currently fairly valued. Since it is currently trading at a price that is about 12% below my intrinsic value, purchasing Meta Platforms at this time would cost you a fair amount of money. There isn’t much room for the share price to increase above where it is currently trading if you think the company’s true value is $209.50. A chance to purchase might arise in the future, though. This is due to Meta Platforms’s high beta, which indicates that its price fluctuations will be disproportionate to those of the rest of the market. The company’s shares will probably decline more than the market as a whole in a bearish market, creating an excellent buying opportunity.
Can We Expect Growth from Meta Platforms?
Before purchasing shares of a company, investors seeking portfolio growth might want to think about the company’s prospects. It’s always a smart investment to purchase a great company with a promising future at a reasonable price, so let’s also look at the company’s projected growth. The future looks promising for Meta Platforms with profit expected to increase by 50% over the following couple of years. It appears that the stock will experience higher cash flow, which should result in a higher share valuation.
What This Means for You?
You own stock, right? The market appears to have already factored in META’s promising future, as shares are currently trading at about their fair value. However, there are still some crucial elements that we haven’t taken into account today, like the management team’s track record. Since you last looked at the stock, have these factors changed? Will you be secure enough to make an investment in the business if the price falls below its fair value?
Possibile investor, are you there? If you’ve been watching META, now might not be the best time to buy given that it is currently trading around its fair value. However, the upbeat outlook is encouraging for the business, so it’s worthwhile investigating other aspects, like the strength of its balance sheet, in order to profit from the subsequent price decline.
This makes it crucial to be aware of the risks if you want to conduct further research on the company. For example – Meta Platforms has 2 warning signs we think you should be aware of.
Meta Stock: is It a Buy?
Earlier successful content transitions, such as the switch to Stories and mobile, have been compared by Meta management to its current transition to Reels monetization. It’s different this time, though. Amidst increased competition and privacy changes, user growth has slowed down, undermining its dominance in display advertising. Meta is still investing heavily to position itself for the potential of the metaverse, which may not materialize for many years. All of this makes it more difficult to believe in the resilience of Meta’s rebound, which will be delayed until recession clouds pass.
Bottom Line: Should You Buy Meta Stock?
After weighing the advantages and disadvantages and considering the potential of the metaverse, it appears that long-term investors who don’t already own any Meta stock might want to buy some now while they are significantly less expensive than they were a year ago.
Even if you ignore the idea of the metaverse, the business still makes a lot of money from advertising, which will eventually recover alongside the economy. And if you have faith in the metaverse’s future, Meta is a top stock to invest in if you have the patience.
