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But whether or not the weakness is over, this company is a great addition to any stock portfolio for the long term. Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data. With its 3-star rating, we believe Meta’s stock is slightly overvalued compared with our long-term fair value estimate. On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines. Shares of Meta Platforms (META 1.22%) were climbing today in response to better-than-expected numbers from big tech peers Alphabet (GOOG -0.84%) (GOOGL -0.91%) and Microsoft (MSFT 0.57%) last night. When it comes to Meta, I’m going to sit out and put the stock in my “not sure” pile while I watch from afar. These red flags, combined with a difficult macroeconomic environment, are weighing heavily on Meta.

META Stock: Poised to Level Up

This is all information marketers can use to target their advertisements more efficiently. Meta Platforms (META 1.22%), formerly known as Facebook, has garnered lots of attention recently, primarily due to the causes that led to the name change. The company has highlighted that it will be investing aggressively to become a leader in the metaverse. It’s now selling at a price-to-earnings ratio of 14.4, and a price-to-free-cash-flow ratio of 13.5. Another challenge potential investors need to look out for is rising competition.

  • 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.
  • Of course, marketers are willing to pay more if their ads can be delivered to more people.
  • But the issue with Meta’s stalled top-line growth is that it isn’t solely due to the macro environment.

The Meta CEO and cofounder’s trust, along with vehicles he uses to make charitable and political donations, disclosed the sales in filings with the Securities and Exchange Commission. The entities sold well over 500,000 shares under trading plans scheduled this summer. Mark Zuckerberg cashed in about $190 million worth of Meta Platforms shares in November, marking his first disposals since 2021, after his company’s stock came roaring back this year. Governments around the world are still scrutinizing Meta over data privacy and related issues.

Economic Moat Rating

In the spring, Apple launched changes to its iOS platform to limit how digital advertisers tracked and targeted iPhone users. If you have an iPhone, you have probably seen this; apps will ask you to opt into being tracked. Users can opt out of being tracked, making Meta’s advertising platform less effective. The company began to feel its impact in its 2021 Q3, but management revealed the full scope of its effect in Q4. So to sum this all up, I expect Meta to beat consensus estimates handily in 2024, which will lead to further multiple expansion, and expect continued momentum in the stock. This means that on a comparable basis, consensus is projecting a margin decline.

Key Data

Nevertheless, the company’s core social media business is experiencing robust user and revenue growth at a massive scale. Let’s try to grasp Meta Platforms’ business better and determine whether it’s a buy, sell, or hold for 2022. Facebook’s daily active user count declined for the first time in 2021 Q4, although slightly, falling to 1.929 billion from 1.930 billion the prior quarter. The social media platforms are Meta’s cash cow, so the thought of a potential decline could alarm investors.

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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. Ahead of the company’s third-quarter earnings report, here’s Morningstar’s take on what to look for in Meta’s earnings, as well as the outlook for its stock. Finally, even after these prearranged sales, Zuckerberg continues to hold a whopping 365 million shares of Meta stock worth roughly $118 billion (as of Friday’s market close).

Zuckerberg first signed the Giving Pledge, a philanthropic commitment spearheaded by Warren Buffett and Bill Gates, in 2010. Meta shares crashed in 2022, but have virtually erased those losses after a 166% advance this year that has crushed the Nasdaq Composite’s 36% gain. Zuckerberg has reclaimed a top 10 spot on the Bloomberg Billionaires Index as a result; he ranked ninth on the wealth index with an estimated $116 billion fortune at Monday’s close. Reels continues to grow while TikTok’s future in the U.S. remains uncertain as lawmakers scrutinize the app, which is owned by China’s ByteDance, for alleged national security issues. Meta executives pointed to several positive signs that its business was on the mend.

They lost two-thirds of their value last year, as the company reckoned with by far its toughest stretch since its IPO a decade earlier. So, this combination indicates that Meta Platforms will most likely beat the consensus EPS estimate. Estimate revisions ahead of a company’s earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model — the Zacks Earnings ESP (Expected Surprise Prediction). Revenues are expected to be $33.43 billion, up 20.6% from the year-ago quarter.

So, in order to understand whether or not there’s still room for upside, we need to weigh in on the company’s growth drivers for 2024. In order to do that, let’s begin with the recently announced third-quarter numbers. Selling the stock now could be the embodiment of a ‘Cutting Your Flowers And Watering The Weeds’ mistake, as there’s still ample runway for margin improvement as well as topline growth. © 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.