Is meta stock a buy?

Meta stock pe ratio?

The P/E ratio of meta platforms seems stable from 2021 to 2022, which suggests investors don’t pay more than the share price. Usually, 20 to 25 is considered good for stock investment. 

However, Meta becomes overvalued from 2023 to 2024, which indicates you have to pay more to buy one stock.

We couldn’t conclude that Meta stock is not a safe investment; instead, it suggests enough growth from the last two years. Up to 30 price-to-earnings ratio is common among tech companies.

 So, Meta’s competitors could not get any competitive advantage from it. 

As an investor, you may think about whether meta stock is a buy. Meta stock has reached its maximum level & there is a possibility to fall price after a short time. 

If you have Meta stock, think about selling, or if you are thinking of buying, then hold on for the price fall. 

Overall, Meta platform stock historically seems a positive investment.  

Meta PEG ratio?

The PEG ratio of Meta is higher than 1, which indicates the overvaluation of stock. Meta doesn’t correlate with price for earnings to growth pattern. If you want to buy Meta stock right now, then you have to pay more than its intrinsic price. 

The stock has a life cycle that describes its behavior in different stages. Currently, Meta stock has reached its maximum growth level, which also suggests not a buy, i.e., this is not a buy time Meta stock.

If you already hold Meta stock, then consider selling it because the Meta platform stock price has already reached more than 85%. Now the question is, when should I buy Meta stock? According to the stock life cycle, Meta stock will start to fall in the near future. Don’t estimate based on current market value to analyze the price gap. For an 80% return, wait for a minimum of 10% price fall than the book value.

Meta price chart?

The price history of Meta stock is different from the prior years. Price hikes but unstable for a long time. Fluctuation means less cash against current expenses. The imbalance between sales & present obligation is common for a tech stock. Tech companies always face innovation challenges such as AI. 

Artificial intelligence has become a standard now among tech companies. Google, Microsoft, Amazon, and even Meta face revenue challenges due to AI technology.

AI will not replace humans or any existing technology company; instead, it will add new dimensions to reduce operating costs. So, how well tech companies implement or how cheaply they buy AI technology that would be a new standard for the stock price.

Meta must find a solution for AI to be a profitable stock.

Another reason could be tough competition to capture new markets. Meta has a good management team with few incidents of internal management conflict. However, it will not give Meta a competitive advantage because Google & Amazon also have exceptional management teams. 

Meta should target slightly different markets that will accept its existing users. The Meta platform did it by establishing new social media platforms like Threads. Threads app has become a popular social media among mass users & many consider it the alternative to X (Twitter). So, Meta has a chance to generate sales in the long term.

The question is, should you buy meta stock now? Well, most analysts predict positively on Meta stock, including renewed Cathie Wood. Meta stock’s current market price is $367.46, 86% higher than its intrinsic price of $197.27. Its price hit below $50 at the end of 2022 & rebounded about 600% in 2023, which is massive. 

So, price history doesn’t indicate this is a buy time; instead, it suggests a selling. However, facts suggest it will again fluctuate and then bounce back with a huge boom. How much the price will increase depends on the accomplishment of its challenges.  

So, my analysis of Meta stock is neutral.

Meta layoffs?

Meta Platforms is the second-highest company for sacking employees in 2024. The maximum number of employees (27,410) layoffs from Amazon & the third highest number of employees (12,115) layoffs from Google. A layoff could happen for two reasons: economic slowdown & new project initiative.

The economic slowdown suggests Meta generates fewer sales to keep its operating efficiency. Meta is a big company that requires more liquid money to meet working capital. Meta doesn’t generate enough cash or perhaps borrow cash from a third party to meet operating costs. 

A new project initiative means investing heavily but not getting a return or facing challenges to accomplish the project. Long-term debt is unsuitable for a company if the project isn’t successful. So, Meta must ensure enough cash solvency to be an outperforming stock.

However, a new project means updating skills with growing interest. Meta platforms invested massive amounts of money in virtual reality (VR) projects.

Therefore, Meta may eliminate those employees who cannot adopt the new set of skills. The price of Meta stock is partially related to VR success & we can’t be bullish on success because Sony or Microsoft could enter the market. 

Therefore, my analysis would be neutral on Meta stock buy.  

Virtual reality market? 

The above VR market graph shows steady growth over the years. This growth doesn’t fluctuate; it shows upward trends, indicating growing adoption. The study by Fortune Business Insights predicted a compound annual growth rate (CAGR) of 24.74% at the end of 2030. VR could be an alternative for Meta to beat its competitors.

The use of virtual reality is diverse, including gaming, entertainment, education, healthcare, and training industries. These all are trending & could drive the growth of the VR market. 

However, Meta may face some competition if VR becomes a trending industry in the upcoming years. Meta must update its technology, such as Metaverse, a crucial technology for VR & make the prices affordable. Lower prices are only possible if they manage cheap resources with a broader market, i.e., VR should not be limited only to America; instead, it should spread globally.  

However, we can’t forecast how Meta’s management will do it. Therefore, my analysis would be neutral on Meta stock buy.   

Meta competitors?

The past market cap data indicates that Meta platform is the third largest internet company in the United States. Meta is a diversified tech company that offers Facebook, Instagram, WhatsApp, & Virtual Reality based products. Ads revenue is the major income source of Meta platforms. 

The giant company Alphabet Inc (Google) products include Google Search, YouTube video, Android, & Cloud computing. Ads revenue is also the main earning source of Alphabet Inc.

The second giant, Amazon, specializes in Online retail, Cloud computing, & Streaming services. 

Meta platforms are behind Alphabet and Amazon regarding market cap. Alphabet captures a $1738 Billion market & Amazon has a $1404 Billion market.

Can Meta beta them? Nothing is impossible to achieve in business, but the fact doesn’t suggest it is possible.

Meta’s current market cap is $777.53 billion. If Meta Platforms wants to beat Amazon, it must perform at double pace but needs more than double market capitalization to win Alphabet Inc.

Realistically, it is impossible because both competitors have customer trust and the best management teams. But Meta platforms mainly focus on social media and virtual reality, whereas Amazon & Alphabet Inc. focused on e-commerce & advertising. That means Meta has a different market capture plan, which could add more markets in the future.

According to historical market data, my prediction on meta stock is positive & buy.

Concluding Thought

Frequently Asked Questions (FAQ)

Stock symbol meta?

Meta is a class A common stock that is traded under the NASDAQ exchange. It uses the trading symbol META to exchange stock. The IPO of Meta raised $5 Billion & overall became a $104 Billion company.

Who owns meta–Platforms Inc?

A single entity doesn’t own meta platforms; instead, they have three owners who control Meta.

Below, the table details the ownership structure of Meta platforms.

Meta stock split history?

Meta has no stock split history & no official announcement to split in the future. Meta, whose former name is Facebook, became a publicly traded company in May 18, 2012 & renamed Meta Platform Inc. in 2021. From 2012 to 2024, Meta never splits its stock. 

Does meta platforms stock pay dividends?

No. Meta platforms stock doesn’t pay stock dividends. Meta is a rising young company & reinvests its profit for long-term growth. It is usual for tech companies to invest in long-term projects. 

The long-term investment could reduce cash, but Meta always maintains a 1:1 ratio. So, Meta has strong management that equally balances short-term obligations & long-term goals.

However, dividend pay decisions could change in the future if the company achieves any milestones. 

Disclaimer

The information provided in this article is author’s view & only for educational purposes. Also, the intention of this article is not hurting any stock analyst. This is not a sponsor post & not an investment advice. Do your research before making any important financial decision. Therefore, FinanceIdeas.org will not be liable for your financial loss.