Meta Stocks: How to Buy Their Stock in 2022?

How to Buy Meta Stocks in 2022

Investors have had a difficult year, especially those with large growth stock allocations. One of the many growth stocks that have taken a severe beating in 2022 is Meta Platforms (META-3.05%). At the time of writing, the stock has lost more than 51% year-to-date. Investors should be aware that this growth stock differs significantly from many of the others in important ways.

The business is incredibly prosperous, has a large cash balance, and spends billions annually on the repurchase of its own stock. And now that the stock has entered the value zone, Meta’s valuation is incredibly low. Since the Facebook parent hit bottom after missing second-quarter profit projections and providing an unfavorable Q3 outlook, Meta stock has had a good two-week rally. However, the overall scenario for Meta Platforms (META) is just getting scarier.

Is It Time To Invest In The Stock Of The Struggling Facebook Parent?

Is It Time To Invest In The Stock Of The Struggling Facebook Parent

Investors should be aware that more than just the stock has underperformed before we examine the valuation of Meta stock and try to establish whether or not shares are a purchase. The underlying company has as well. The business’s rate of year over year sales growth declined and eventually went negative over the past year. Revenue during the second quarter fell 1% from the prior year. Even worse, management predicted that revenue would fall between 2% and 10% year over year in the third quarter.

It’s understandable why Meta stock has fallen. Contrasting sharply with the company’s rapid growth rates the previous year is this modest growth. For instance, Meta’s revenue increased 35% year over year in the third quarter of 2021. There are also the Concerns are growing over Meta’s enormous losses in its newly formed reality labs division, which includes the company’s augmented and virtual reality consumer hardware, software, and content. Although it contributed to a $2.8 billion operating deficit, the segment’s second-quarter revenue was $452 million.

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Meta Is Still A Money Maker.

Investors, however, might want to think twice about undervaluing Meta stock at this point. Despite the reality labs division’s cash-burning operations, the tech corporation is a cash cow. The cash that is still available after normal operations and capital expenditures are taken into account is called free cash flow, and Meta’s trailing-12-month free cash flow was $35.8 billion.

What About The Cash On Hand Of The Business?

What About The Cash On Hand Of The Business

There’s a More than $40 billion in cash, cash equivalents, and marketable securities are kept in reserve. Being a cash cow like this has financial benefits. In particular, Meta may use the funds to repurchase its stock if it determines that it has fallen in value. This is exactly what the business is doing, purchasing around $5 billion worth of its shares in Q2. Looking ahead, Meta had more than $24 billion, or 5% of its current market cap, left in its buyback authorization.

The market appears to have factored in the majority of Meta’s problems as the company is currently trading at just 12 times free cash flow and only 14 times profits. This is especially true if investors believe management when they say that some of the company’s problems are temporary. immediate issues.

Sheryl Sandberg, the chief operating officer of Meta, stated on the company’s second-quarter earnings call that “there’s no doubt that we’re going through a transition period and doing so at a time of global economic instability.” “But despite the difficulties we are currently facing, I have great hope for the future. Although there is currently a cyclical slump, the digital advertising sector will eventually resume its upward trend.”

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There is no assurance that Sheryl is correct, but the stock may have dropped sufficiently in price to make a tiny purchase worthwhile despite the risk. In fact, if Meta does experience considerable growth once more, the stock will probably seem incredibly undervalued in the long run.

Would It Be A Good Idea To Put $1,000 Into Meta Platforms, Inc. Right Now?

You should think twice before considering Meta Platforms, Inc. hearing this. The top ten stocks, in their opinion, for investors to buy right now have just been revealed by our award-winning expert team. Neither was Meta Platforms, Inc. one of them. They have been operating Motley Fool Stock Advisor, an online investment service, for 20 years. In that time, they have outperformed the market by a factor of three.

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Richard Burman

I am a student of Miranda House, University of Connecticut currently in my 3rd year pursuing a Business (Hons). I'm Skilled In Writing, Speaking And Very Much Open To Learning Process. Some Of My Hobbies Are Reading, Music, And Dance.

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