Formerly known as Facebook, Meta Platforms (NASDAQ:FB) is the brainchild of ultra-wealthy entrepreneur Mark Zuckerberg, the company’s CEO. Some folks are on board with Zuckerberg’s vision for the metaverse, while others aren’t. Yet, it’s smart to hold at least a few shares of META stock, as the metaverse’s growth could be explosive.
Do you remember the first time you heard about Zuckerberg changing the name and overall focus of Facebook? It might have seemed like he was losing his grip on reality. Yet, hanging on during this time of transition could pay off handsomely.
As Zuckerberg doubles down on the metaverse market, investors can either step aside and watch from afar, or take a chance on META stock and potentially profit from this computer-generated revolution.
What’s Happening With META Stock?
Did you ever imagine that META stock could be a value stock? For years, when it traded as FB, the stock had “growth” written all over it. Nothing goes up forever, though, and now there’s a bargain afoot that’s hard to resist.
Amazingly, Meta Platforms’ trailing 12-month price-to-earnings ratio has come down to just 12.9. This was unimaginable a year ago. Apparently, tech stocks are out of favor on Wall Street. That’s fine, though, as it allows value hunters to go shopping for great discounts.
It’s shocking to consider that META stock has lost more than half of its value over the past year. After all, it’s not as if the company is bleeding money. During the first quarter of 2022, Meta Platforms grew its revenue 7% year over year, to $27.9 billion. And it generated $7.5 billion in net income.
Plus, investors should keep in mind that over the past five years, shares have outperformed the S&P 500 by a ratio of nearly 7-to-1.
Meta Platforms Eyeing a $3 Trillion Market
For anyone who is skeptical about Zuckerberg’s vision and the metaverse in general, consider this. Nick Clegg, Meta Platforms’ president of global affairs, cited an estimate that “the metaverse economy could be worth more than $3 trillion globally in a decade.”
Of course, projections don’t always pan out. Yet, there’s an analogy here that might appeal to forward-thinking investors. Clegg hearkened back to the days before Facebook existed, writing: “In its infancy, no one could have imagined the overwhelming impact the internet would have on commerce. And it is the same right now with the metaverse.”
That’s a fair point. The metaverse is a technology and a movement that’s still in its infancy. Facebook seemed like a weird concept in its early days, too. So, in a manner of speaking, Meta Platforms could be the next Facebook.
At the very least, it appears that Zuckerberg is confident that Meta Platforms will overcome its challenges, like convincing people to buy virtual reality headsets. “We have this long-term roadmap to basically solve all these different challenges, which we think are going to be critical to delivering this really rich sense of presence,” Zuckerberg said.
The Bottom Line on META Stock
It’s fine if you’re still skeptical of the metaverse. You don’t have to own META stock. But don’t be shocked if the share price heads higher in the coming years.
Value investors can appreciate Meta Platforms’ low valuation. Really, though, you should only invest in META stock if you want one thing: direct, long-term exposure to the exciting, early-stage metaverse market.
On the date of publication, David Moadel 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.
