Meta stock took a steep tumble this week and looks to be continuing the downward trend we’ve seen over the past year. This trend isn’t necessarily unique to Meta, either. Tech stocks as a whole are suffering this year amidst inflation, recession fears, and other external factors.
But, there is one problem Meta, in particular, is up against that has led to the dramatic fall we’re seeing in the stock: advertising concerns. Apple’s decision to take over the advertising world (under the guise of “user privacy”) has left companies like Meta, Google, and other advertising platforms looking to pivot their business. While some businesses have managed to stay profitable advertising on Meta, many have slashed their spending and allocated it elsewhere. In fact, Meta only enjoyed being a part of the $1 trillion club for a short while. Their market cap has been cut in half, and their stock price dynamics reflect it.
Along with uncertainty surrounding the future of their advertising revenue, Meta was just hit with a $22 million fine by South Korea for privacy violations. This is just the latest in legal battles, as they continue to face anti-trust lawsuits.
There are still questions as to the long-term direction of Meta’s business model and its overall longevity. There are even questions as to whether or not Mark Zuckerberg is fit to take them there. However, there has been a bit of good news to come out recently. Leaks of the new Meta Quest Pro Headset have surfaced ahead of its release in the coming months. This headset is said to be the beginning of a new era for Meta. With its own device ecosystem, Meta has the potential to restore advertising revenue – where Apple is unable to impose data limitations that bog down advertising campaigns.
With that said, investors who are currently in Meta can only hold on so much longer. The stock is down 60% this year – and while the Metaverse could be the difference, is it time to cut losses on Meta and get back in at a lower price point? Or, should potential investors view this as the bottom and get in now before Meta’s headset releases in late October? Our stock analysis tools offer valuable insights you need to know before you make your next move…
Despite Very Good Safety, Meta’s Upside Potential & Price Trend are Concerning
VectorVest helps you eliminate emotion and guesswork from your stock analysis. Instead of filtering through countless charts and tracking a myriad of different technical indicators, you can rely on 3 simple ratings to tell you everything you need to know about a stock: Relative Value (RV), Relative Safety (RS), and Relative Timing (RT). These are put on a scale of 0.00-2.00 with 1.00 being the average. Together, these make up the overall VST rating and deem whether VectorVest rates a stock a buy, sell, or hold. So, let’s dig into Meta:
- Fair Upside Potential: The long-term price appreciation potential for Meta is just below average with an RV of just 0.93. This is calculated based on the projected price appreciation 3 years out along with AAA Corporate bond rates, risk, and more.
- Very Good Safety: RS is an indicator of risk. It’s calculated from an analysis of the consistency and predictability of a stock’s financial performance, debt-to-equity ratio, business longevity, and more. And, Meta’s RV rating of 1.25 is very good.
- Poor Timing: The biggest issue investors need to be aware of is the negative price trend Meta currently has pushing its stock downward. The RT rating of 0.63 is based on the dynamics, direction, and magnitude of a stock’s price movement.
All things considered, Meta falls right in the middle of the VectorVest rating system with a VST of 1.00. Does this mean you should buy, sell, or hold the stock, though? To receive a clear recommendation and make a confident decision, get a free stock analysis here.
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VectorVest advocates buying safe, undervalued stocks, rising in price. As for META, it has fair upside potential with very good safety. However, it does have a negative price trend pushing the price down.
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