Connect with us

Hi, what are you looking for?

Markets

Meta Platforms’ Stock Is Trading Close To Its Fair Value

Meta Platforms’ stock (NASDAQ
NDAQ
: META) has gained 98% YTD, while the S&P500 is up only 8% over the same period. The stock price touched a 52-week low in the last quarter of 2022. However, it has seen a sharp recovery since then. It was because of several reasons, better than expected results in both Q4 2022 and Q1 2023, consistent growth in the user base, a strong business model, focus on optimizing costs, and a share repurchase program worth $40 billion.

The stock is currently trading around $239 per share, which is 4% above its fair value of $228 – Trefis’ estimate for Meta Platforms’ valuation. Its total revenues increased 3% y-o-y to $28.65 billion in the first quarter of 2023, beating the street estimates. Further, daily active users (DAUs) improved by 4% y-o-y to 2.04 billion for March 2023. Along with this, the firm repurchased $9.2 billion of common stock in Q1, as part of its share repurchase program. That said, the cost and expenses rose by 10% y-o-y, reducing the net income by 24% y-o-y to $5.7 billion. Notably, the expense figure includes charges related to restructuring efforts of $1.14 billion.

The top line marginally decreased to $116.6 billion in FY2022. The decrease was due to a tough macroeconomic condition, which negatively impacted advertising revenues. However, the DAUs still improved by 4% y-o-y. On the cost front, the net income was down 41% y-o-y to $23.2 billion. It was due to an unfavorable increase in research & development costs.

Moving forward, we expect the growth rate of advertising revenues to recover over the subsequent quarters. Notably, META expects the Q2 revenues to remain between $29.5-32 billion. Overall, we estimate Meta Platforms’ revenues to touch $122.4 billion in FY2023. Additionally, the adjusted net income is likely to remain around $25.73 billion in the year. This coupled with an annual EPS of $10.02 and a P/E multiple of just below 23x will lead to a valuation of $228.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Invest with Trefis Market Beating Portfolios

See all Trefis Price Estimates

Read the full article here

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

News

Illumina, Inc. (NASDAQ:ILMN) Annual Evercore ISI HealthCONx Healthcare Conference December 3, 2024 9:00 AM ET Company Participants Ankur Dhingra – CFOSallilyn Schwartz – VP...

News

This article was written by Follow Long-only investment, evaluating companies from an operational, buy-and-hold perspective.Quipus Capital does not focus on market-driven dynamics and future...

News

America’s Car-Mart, Inc. (NASDAQ:CRMT) Q2 2025 Earnings Conference Call December 5, 2024 9:00 AM ET Company Participants Vickie Judy – CFODoug Campbell – President...

News

Genesco Inc. (NYSE:GCO) Q3 2025 Earnings Conference Call December 6, 2024 8:30 AM ET Company Participants Darryl MacQuarrie – Senior Director of FP&AMimi Vaughn...