The Worst Could Be Over for Meta Platforms

FB stock - The Worst Could Be Over for Meta Platforms

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Once a reliable growth name, there’s nothing fun these days about Meta Platforms (NASDAQ:FB) stock. The parent company of Facebook is down more than 42% so far this year. But the worst appears to be over. Growth stocks are all taking it on the chin this year. But if nothing else, FB stock is no worse off than any of the other FAANG stocks over the last few weeks.

Over the last trailing month, Meta Platforms is down 14.4%. But Alphabet (NASDAQ:GOOGL,NASDAQ:GOOG) is pretty much in the same boat, down 14.2%. Smartphone maker Apple (NASDAQ:AAPL) is down 8.8%. Then there’s Amazon (NASDAQ:AMZN), which is down 31.7% in the last month. Netflix (NASDAQ:NFLX) is at the bottom of the heap, collapsing 52.4% over the last 30 days.

On top of that, Meta is coming off a pretty solid earnings report. While some people were expecting the wheels to come off, Meta reported earnings per share (EPS) of $2.72, while analysts were expecting an EPS of $2.56. Revenues weren’t quite up to speed at $27.91 billion, while analysts expected $28.2 billion. Meta was also in the ballpark when it came to other key metrics. Daily active users were 1.96 billion, just beating Wall Street’s mark. Monthly active users were a little off — they came in at 2.94 billion when analysts expected 2.97 billion. But the company also beat on how much revenue it got per user, with an average of $9.54 versus the expectation of $9.50.

That’s why FB stock popped by 18%. Because the earnings easily topped the low bar that investors set headed into the earnings report. Can the company formerly known as Facebook continue to score Wall Street wins with an earnings report that is solid, but not special? Probably not.

But Meta Platforms is going through a crazy transition right now anyway. The company changed its name and it is changing its focus — moving away from a social media platform and into a metaverse that Chief Executive Officer Mark Zuckerberg hopes will revolutionize the company.

While the company is in transition, FB stock isn’t going to be a huge winner in the immediate future. It’s investing massive amounts of money in the future and it will take time for those investments to pay off. But the worst of Facebook’s losses may be in the rear-view mirror now.

If you believe in the metaverse, then FB is probably a must-buy stock for your portfolio. But if you’re like me, you’re taking a more skeptical stance on the changes that Meta Platforms is making before deciding if Facebook truly has a second act.

On the date of publication, Patrick Sanders was long AAPL stock. He 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 InvestorPlace.com Publishing Guidelines.

Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders.


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