Meta stock analysis. META.
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Meta currently has a market cap of 617 billion dollars. It’s got 11.6 billion of cash on the balance sheet and 10 billion of debt so the enterprise value is 615 billion.
Over the last 12 months, the company has made 117 billion dollars of revenue, 21 billion of net income and 17.6 billion of free cash flow. That means the stock is valued at 5 times revenue, 29 times earnings or 35 times free cash flow.
Those multiples are not cheap, especially when you consider stalling growth. Q1 revenue increased by only 3% and net income fell by 24%.
On the plus side, daily active people increased 5% to 3.02 billion so bulls say the company has plenty of levers to pull.
Looking at the stock chart, Meta is a great example of a company that in a short period of time changed priorities multiple times, all thanks to Mark Zuckerberg’s vision.
Meta has dual-class shares, and due to this structure, Mark owns almost 60% of the voting rights, despite owning a lot less of the company.
This gives him the ability to exercise significant influence in which direction the company is going.
After introducing the metaverse, and changing the company name from to Meta, a lot of uncertainty arose.
The company started investing tens of billions into a new segment called Reality Labs.
The shareholders weren’t comfortable with this decision and the share price declined by 75%.
Sentiment changed significantly and Meta was no longer seen as a company with a strong portfolio of cash-generating apps. Instead, it was seen as a company taking risky bets.
Although Zuckerberg has the majority of the voting rights, this could not be ignored and Meta had to make a change. Instead of going all in on the metaverse, the focus shifted to improving operating efficiency, which also resulted in reducing the number of employees.
This decision, was welcomed by the market, the sentiment changed again, and the share price has since increased by over 160% to $240 in less than 6 months.
#metastock #stocks #investing #stockmarket
Visit our website for more: https://www.overlookedalpha.com
Meta currently has a market cap of 617 billion dollars. It’s got 11.6 billion of cash on the balance sheet and 10 billion of debt so the enterprise value is 615 billion.
Over the last 12 months, the company has made 117 billion dollars of revenue, 21 billion of net income and 17.6 billion of free cash flow. That means the stock is valued at 5 times revenue, 29 times earnings or 35 times free cash flow.
Those multiples are not cheap, especially when you consider stalling growth. Q1 revenue increased by only 3% and net income fell by 24%.
On the plus side, daily active people increased 5% to 3.02 billion so bulls say the company has plenty of levers to pull.
Looking at the stock chart, Meta is a great example of a company that in a short period of time changed priorities multiple times, all thanks to Mark Zuckerberg’s vision.
Meta has dual-class shares, and due to this structure, Mark owns almost 60% of the voting rights, despite owning a lot less of the company.
This gives him the ability to exercise significant influence in which direction the company is going.
After introducing the metaverse, and changing the company name from to Meta, a lot of uncertainty arose.
The company started investing tens of billions into a new segment called Reality Labs.
The shareholders weren’t comfortable with this decision and the share price declined by 75%.
Sentiment changed significantly and Meta was no longer seen as a company with a strong portfolio of cash-generating apps. Instead, it was seen as a company taking risky bets.
Although Zuckerberg has the majority of the voting rights, this could not be ignored and Meta had to make a change. Instead of going all in on the metaverse, the focus shifted to improving operating efficiency, which also resulted in reducing the number of employees.
This decision, was welcomed by the market, the sentiment changed again, and the share price has since increased by over 160% to $240 in less than 6 months.
#metastock #stocks #investing #stockmarket
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NewsTranscript
00:00 Should you buy Meta stock? Meta currently has a market cap of $617 billion. It's got
00:06 $11.6 billion of cash on the balance sheet and $10 billion of debt so the enterprise
00:11 value is $615 billion. Over the last 12 months the company has made $117 billion of revenue,
00:18 $21 billion of net income and $17.6 billion of free cash flow. That means the stock is
00:23 valued at 5 times revenue, 29 times earnings or 35 times free cash flow. Those multiples
00:30 are not too cheap, especially when you consider stalling growth. Q1 revenue increased by only
00:36 3% and net income fell by 24%. On the plus side, daily active people increased 5% to
00:43 $3.02 billion so bulls say the company has plenty of levers to pull.
00:49 Looking at the stock chart, Meta is a great example of a company that in a short period
00:53 of time changed priorities multiple times, all thanks to Mark Zuckerberg's vision.
00:58 Meta has dual class shares and due to this structure Mark owns almost 60% of the voting
01:04 rights despite owning a lot less of the company. This gives him the ability to exercise significant
01:10 influence in which direction the company is going. After introducing the Metaverse and
01:15 changing the company name to Meta a lot of uncertainty arose. The company started investing
01:21 tens of billions into a new segment called Reality Labs. The shareholders weren't comfortable
01:26 with this decision and the share price declined by 75%. There's no doubt that Meta was a
01:31 good purchase when it dropped below $100 a share. Now the share price has increased,
01:36 there's much less margin of safety. Let's assume a scenario where Meta grows revenue
01:42 10% a year for the next 10 years then operates with a 25% net margin. That would produce
01:48 $84 billion of net income in 10 years time, apply a 25 times multiple to that figure and
01:54 you get an enterprise value of $2.1 trillion. So that works out to an investment return
01:59 of 13% per annum. Which isn't bad but it's not great either.
02:05 Meta could certainly turn out to be a good investment but there are a lot of questions
02:08 that need to be answered. Is Meta going to increase its investments in the Metaverse?
02:13 Are users turning away from Meta's apps? And crucially, how can Meta reignite growth?
02:19 For now I give the stock a neutral rating but these are my opinions not financial advice,
02:24 I've got no position in this stock. For more detailed investing ideas join our newsletter
02:29 at overlookedalpha.com