Nasdaq FB FaceBook

Shares of Meta Platforms (NASDAQ: FB) recovered about 16% from its recently crafted 52-week low. However, it continues to remain under pressure due to various reasons. 

It’s worth noting that the slowdown in its growth, higher competitive activities, Apple’s (NASDAQ: AAPL) privacy changes, and macro headwinds took a toll on Meta stock. 

Facebook’s daily active user growth has been moderating on a sequential basis. Meanwhile, it declined on a quarter-over-quarter basis in Q4. Management blamed higher competitive activity for the slowdown. 

While increased competition remains a drag, management expects Apple’s privacy changes to have an adverse impact of $10 billion on its top line in 2022. 

The recent decline indicates that these negatives are priced in Meta stock. However, BuzzFeed (NASDAQ: BZFD) CEO Jonah Peretti recently stated that audiences are spending lesser time on Facebook, which isn’t favorable news for Meta Platforms’ shareholders. 

Notably, BuzzFeed is a digital media company that generates most of its audience traffic from Facebook. 

Commenting on BuzzFeed’s Q4 operating performance, its CFO, Felicia DellaFortuna, stated that “time spent declined 4% year-over-year to 186 million hours, reflecting a shift in time spent away from Facebook and onto platforms such as Instagram and TikTok.” 

Further, DellaFortuna added that this has “disproportionately impacted” its commerce revenues compared to other businesses. Looking ahead, BuzzFeed sees audiences spending lesser time on Facebook. Thus, it is focusing on lowering its dependence on one platform and is working on diversifying its distribution channels. 

Now What?

BuzzFeed’s guidance indicates that Meta Platforms’ problems are here to stay, at least in the foreseeable future. 

Owing to the multiple growth concerns (slowdown in growth, competition, Apple’s privacy changes, and shift towards slower-to-monetize short-form videos), Wall Street analysts are cautiously optimistic on Meta stock. 

It has received 32 Buys, 13 Holds, and one Sell recommendation for a Moderate Buy consensus rating. Moreover, the average Meta Platforms price target of $325.10 indicates 49.4% upside potential from current levels.

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Technology stocks on Thursday lifted Wall Street's main indexes from a sharp fall in the previous session, while investors closely tracked a meeting of Western leaders as the Ukraine crisis enters its second month.

Shares of "connectivity" company and metaverse hopeful Meta Platforms (FB) have ricocheted sharply off its bottom just south of $200. With the stock market experiencing such a massive weekly surge, all eyes are back on new highs, even though the risks haven't changed all that much over the past week.

With the ongoing crisis in Ukraine, lingering "stealth Omicron" COVID concerns, and a suddenly more-hawkish Fed, it may be a shocker to see stocks bounce so quickly.

I'm bullish.

Meta Stock's Epic Fall

The biggest shocker in markets for 2022 so far, I believe, is the crash in FB stock. Prior to its vicious post-earnings sell-off, a 50% peak-to-trough crash in such an established FAANG stock would have been laughable.

With so much negativity built up in the company over the years, it certainly seemed like many investors were just waiting for a reason to throw in the towel.

Now that Facebook's DAU (Daily Active Users), a top metric to gauge growth in social-media companies, has shown weakness, the floodgates have opened for sellers waiting to exit.

I think Meta stock is a bargain hiding in plain sight. Yes, there's baggage with the name, but for the price you'll pay, it's tough to complain.

Valuation Reset

Today, the bar ahead of FB stock is unfathomably low, with the stock going for a measly 15.5 times trailing earnings.

Looking ahead, I don't think it will take much to nudge the stock higher as it looks to prove its doubters wrong come its next round of quarterly results (Q1 2022), currently slated for an April 26 reveal.

That said, many may be inclined to view Meta as a value trap and no longer worthy of the FAANG basket. Even if Facebook misses the mark with underwhelming DAU numbers, there's a lot to love about Meta's ability to reinvent itself. It's still an innovative company, although many skeptics may slam it for being a copycat or a firm keen on anti-competitive acquisitions.

While some M&A moves may have been anti-competitive, I'm not against the "if you can't beat them, acquire them" mentality, as long as anti-trust regulators stay out of the way. Facebook and Instagram have enjoyed such a dominant position in the social media scene for years.

Making moves to become more monopolistic are a wise idea in my books. With a market cap in the $587-billion range, Meta should hunt for acquisitions to bolster its position in the face of rising threats like TikTok, which seems too distant for Meta to scoop up at this juncture.

In any case, FB stock seems like it ought to be valued in the low-20 times earnings range, not the mid-teens.

Can Facebook, Instagram Draw Younger Crowds?

Facebook has a reputation for being the social media platform of choice for old people.

Some may view such a trend as a failure to keep up with the times, but I view it as the move from young to old as a source of a moat.

Like it or not, the platform is sticky among older audiences who are less likely than the young to shift some of their engagement over to new, more exciting platforms like TikTok.

Meta is also innovating with its metaverse ambitions, NFT collectibles, and other initiatives that could help make its platforms great with younger users again. Instagram is still a staple among younger audiences, and may evolve to become Meta's bread and butter business if it isn't already.

Wall Street's Take

According to TipRanks’ rating consensus, FB stock comes in as a Moderate Buy. Out of 46 analyst ratings, there are 32 Buy recommendations, 13 Hold recommendations, and one Sell recommendation.

The average Meta price target is $325.10, implying 49.6% upside potential. Analyst price targets range from a low of $220 per share to a high of $466 per share.

Bottom Line on Meta Stock

There's a lot to dislike about Meta after its fourth quarter. However, the valuation and robust long-term fundamentals make Meta stock tough to pass up as stock markets rebound from their first-quarter corrections.

Download the TipRanks mobile app now

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Read full Disclaimer & Disclosure

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Meta Platforms FB has recently been sued by the Australian competition watchdog for posting fake celebrity advertisements on its social media platform.Per Independent, the Australian Competition & Consumer Commission (ACCC) complained that Meta failed to prevent scamm