Now that Meta Platforms (META), formerly Facebook, trades at prices not seen since 2017, investors
need to re-evaluate the stock. Buy and hold investors are now breaking even if they did not sell the
stock in 2021.
The social networking giant trades at a price-to-earnings ratio in the low teens. In value territory, META
stock’s risks are low. This sets up the stock for a near double.
META stock needs to lead the metaverse pivot. Its core business on Facebook and Instagram requires
steady cash flow and revenue growth. This may not happen this year. Customers might curtail
advertising spending to adjust for the major recession ahead.
Meta investors could assume that ad demand does not fall. Furthermore, Apple’s IDFA led to a one-time
drop in revenue. From here, Meta may re-invest all cash flow to the metaverse platform. As customer
activity grows, competitors like Apple (AAPL) and Google (GOOG) must invest in the space, too. Thanks
to Meta’s early investments in the space, it could build an increasingly bigger moat.
Meta may continue leveraging its Instagram, WhatsApp, and Facebook platforms. The more that users
migrate away from those sites to Oculus and Meta, the more META stock is worth.
