It was a turbulent end of 2021 for shares of social-media kingpin Meta Platforms (NASDAQ: FB), formerly Facebook. After what was the perfect storm of negative headlines and a whistleblower, it’s not a mystery as to why FB stock had stalled in spite of its solid fundamentals.
Facebook gave itself a facelift, and it seems ready to leave last year’s barrage of bad news behind. Many people are still upset at the company’s prior practices. With a focus on improving itself and a broader focus on the metaverse, investors have a lot of reasons to forgive the company and give its CEO Mark Zuckerberg the benefit of the doubt.
Does Zuckerberg deserve such a second shot? Perhaps, but for investors, it’s hard to ignore the incredible growth prospects at a valuation that seems unreasonably depressed.
I remain bullish on FB stock for the year, as do most analysts covering the name.
Meta Stock: Profitable Growth on the CheapWith the 20% peak-to-trough drop now in the rearview mirror, the name is a rare breed on the Nasdaq 100, offering remarkable growth at what appears to be a deep discount. Investors are discounting the firm’s ability to make things right, as it shifts gears with its aggressive push to build its metaverse.
Headlines still seem bleak, especially from an ethical point of view. The real question on investors’ minds is not whether Meta can continue keeping its impressive growth alive, but if it can repair its reputation with select users.
In terms of growth, Meta has proven it can keep producing incredible numbers through good and bad times. With the metaverse unlocking a new world of opportunities, I think Facebook could raise the bar on its growth. It is a worthy member of the FAANG basket, after all. It’s arguably one of the cohort’s cheapest plays with shares trading at 23.7 times trailing earnings.
Profitable growth for cheap? What’s the catch? You’ll have to put your faith in the leadership of Zuckerberg, a brilliant businessman who’s keen on improving his reputation after a turbulent 2021.
Meta’s Metaverse AmbitionsMeta is a high-growth stock, but it’s one that’s incredibly profitable. As rates rise, real profits in the present are increasingly important to investors. Gone are the days where one can just buy a momentum stock and expect to do well.
Facebook has a reputation to repair, but I think it can, as it brings in the right people to fix the mess that boiled over last year. Can another storm of negative headlines strike once the metaverse is mainstream? That’s a real risk, and it’s hard to gauge the extent of such a risk, especially given the stakes could be higher now that congress is on alert.
Given such risks, Meta’s management team will likely look at ethical considerations closely. Sure, that’s easier said than done, especially once the masses head to virtual worlds. Regardless, I don’t think such room for reputational improvement is yet baked into the stock.
Up ahead, Meta is moving into the metaverse. It’s a risky and expensive move for sure given the competition among top metaverse stocks. Under Zuckerberg’s leadership, the next-generation pivot may be somewhat less risky, given the man’s a brilliant, albeit somewhat controversial, visionary in the tech space.
Wall Street’s TakeAccording to TipRanks’ analyst rating consensus, FB stock comes in as a Strong Buy. Out of 33 analyst ratings, there are 28 Buy recommendations and five Hold recommendations.
The average Meta Platforms price target is $409.02. Analyst price targets range from a low of $300 per share to a high of $466 per share.
Bottom Line on Meta StockThe company has proven it knows how to monetize emerging tech in a big way. Further, I do think investors can expect continued profitable growth from the firm, as more light is shed on its next-generation offerings from its intriguing Reality Labs division, which could be the next massive growth driver for FB stock.
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Big tech stocks have witnessed a fair amount of selling over the past month. Valuation concerns and uncertainty regarding the COVID-19 pandemic led to a selloff in tech stocks. The chart below shows that big tech companies are trading in the red, while Apple (NASDAQ:AAPL) and Meta Platform (NASDAQ:FB) barely managed to stay in the green over the past month.
With tech stocks currently under pressure, let’s look at each of these tech giants to ascertain what the future holds for them in 2022.
AppleDespite supply-chain concerns, Apple delivered a solid financial performance in FY21. Strong sales across all product categories and strength across all of its geographies drove Apple’s financials, and in turn, its stock, which outperformed the benchmark index in 2021.
Looking ahead, demand for Apple products is likely to outpace supply, as noted by Wedbush analyst Daniel Ives. The analyst is bullish on Apple stock. He sees higher demand and the easing of supply-chain issues in the first half of 2022 as a tailwind for Apple stock. Moreover, Ives noted that higher average selling prices provide a multi-year growth opportunity.
Besides robust demand and higher selling prices, Ives expects Apple to gain from its growing market share in China.
Overall, the majority of analysts are bullish on Apple stock. Its Strong Buy consensus rating is based on 21 Buys, 3 Holds, and 1 Sell. However, hedge funds have been selling Apple stock. TipRanks’ Hedge Fund Trading Activity tool shows that hedge funds have sold 4 million Apple shares over the past three months.
AmazonTough comparisons, cost inflation, and supply-chain disruptions weighed on Amazon’s (NASDAQ:AMZN) financial performance in 2021, and in turn, its stock price. Amazon stock underperformed the Nasdaq 100 Index by a wide margin in 2021.
Given the near-term challenges, investors and hedge funds have a negative outlook on Amazon stock. TipRanks’ Stock Investors tool shows that about 1.3% of investors holding portfolios on TipRanks have sold AMZN stock in the last 30 days. Meanwhile, hedge funds have lowered their holdings by 576.2K shares in three months.
Nevertheless, Monness analyst Brian White is bullish on Amazon for 2022. He expects Amazon’s growth to accelerate in the 2H22. Further, White noted that AWS’ (Amazon Web Services) revenue growth has accelerated over the past three quarters, while Amazon is well-positioned to benefit from an “accelerated digital transformation.”
Along with White, most Wall Street analysts maintain a bullish outlook on Amazon stock. AMZN has received 30 positive analyst reviews for a unanimous Strong Buy consensus rating.
AlphabetAlphabet (NASDAQ:GOOGL) stock delivered strong returns in 2021 and outperformed its peers, thanks to the stellar recovery in ad sales and the strength of its cloud business.
Looking ahead, Alphabet could benefit from higher advertising revenues and growth in the cloud segment. Further, its balance sheet and cash flows remain strong.
Taking note of its strong cash flows, Ivan Feinseth of Tigress Financial stated that Alphabet would continue to boost shareholders’ returns through share buybacks and fund its growth initiatives on the back of its robust cash flows.
Feinseth sees Alphabet benefiting from secular tech trends, including video sharing, cloud computing, growing mobile engagement, and the ongoing shift to digital advertising, among others.
On TipRanks, Alphabet stock sports a Strong Buy consensus rating based on 26 Buy and 2 Hold recommendations. Furthermore, 1.9% of the investors holding portfolios on TipRanks have increased their exposure to GOOGL stock over the last 30 days.
MicrosoftThanks to the strength in its cloud business, Microsoft (NASDAQ:MSFT) stock increased over 49% in one year and outperformed the benchmark index. Despite the appreciation in its share price, Jefferies analyst Brent Thill is upbeat about Microsoft’s prospects and maintains a bullish outlook on the stock. Thill increased his price target on Microsoft to $400 from $375.
Thill sees Microsoft as the “safest largecap investment option” with multiple growth vectors. The analyst expects Microsoft to continue to enhance shareholder value on the back of its strong profitability and free cash flows. However, he expects Microsoft’s top-line growth to moderate a bit in the coming quarters.
Overall, on TipRanks, Microsoft stock has received 24 Buys and 1 Hold for a Strong Buy consensus rating. Furthermore, it scores a 9 out of 10 on TipRanks’ Smart Score system, indicating that MSFT stock could outperform the market averages.
Meta PlatformsFacebook changed its name to Meta Platforms to better reflect a metaverse company. However, investors and hedge funds continue to dump their stock.
TipRanks’ Stock Investors tool shows that about 0.7% of investors holding portfolios on TipRanks have sold FB stock in the last 30 days. Meanwhile, TipRanks’ Hedge Fund Trading Activity tool shows that hedge funds have sold 1.7 million Meta Platforms shares over the past three months.
Monness analyst Brian White noted, “The longer-term journey for Facebook became more intriguing in the later part of 2021 with the company introducing its vision for the metaverse, followed by a name change to Meta Platforms.”
However, he expects Apple’s app tracking transparency to continue to hurt Meta Platforms in the future.
Nevertheless, he maintains a Buy rating on Meta Platforms and expects it to benefit from favorable digital ad trends and digital transformation opportunities. Meanwhile, on TipRanks, FB stock has a Strong Buy consensus rating based on 28 Buys and 5 Holds.
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Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
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