Meta Platforms (FB) – formerly known as Facebook – is an American social networking service and social media platform founded in 2004.
I am bullish on Meta Platforms as its strong backing from Wall Street, growth momentum, and competitive strengths add to the attractive valuation to make it look like it might be a good time to buy. (See Analysts' Top Stocks on TipRanks)
StrengthsBy 2020, Meta Platforms' Facebook platform had 2.8 billion active users and was ranked seventh in global internet use. It is also the most downloaded mobile app of the 2010s. It now has about 2.9 billion users and is still growing.
Facebook is accessible from any device with internet connectivity, including computers, tablets, phones, etc. Users can create profiles and share text or multimedia posts that are shared with 'friends' – other users they are connected to. Users can also communicate directly through Messenger or groups with other members of common interest.
Recent ResultsMeta Platforms reported revenue of $29 billion in the third quarter 2021, with a large part of this coming from advertising. This showed an increase of about 35.5% compared to the same quarter last year.
Total earnings per share were at $3.22 in comparison to last year's $2.71, at a 19% increase.
Daily active users for the quarter were at 1.93 billion, which shows a year-over-year increase of 6%. Meanwhile, monthly active users were 2.91 billion, also up 6%.
Capital expenditures were at $4.54 billion for the quarter, which included principal payments for finance leases. The company repurchased $14.37 billion worth of class A shares and announced a $50 billion increase in share repurchase authorization.
Cash & cash equivalents and other marketable securities on hand were valued at $58.08 billion. The company currently employs 68,177 people, which shows an increase of 20% since the previous year.
Starting with the fourth quarter of 2021, the company plans to break out Facebook Reality Labs as its own segment and dedicate resources to products and services that use virtual and augmented reality.
Total revenue for the fourth quarter is expected to be within the range of $31.5-34 billion. The company faces uncertainty around revenues due to the changes in Apple's iOS, as well as COVID-19 and macroeconomic factors.
Total expenses for 2021 are expected to be within the range of $70-71 billion, with this number increasing significantly for the next year as investments in technical and product talent increase.
Valuation MetricsMeta's stock looks attractively valued right now as its forward EV/EBITDA multiple of 13.4x and forward price-to-normalized earnings ratio of 24.3x are both below the company's five-year averages of 13.9x and 25.2x, respectively.
Furthermore, the company enjoys a strong growth outlook, with EBITDA expected to grow by 40% in 2021 and 5.8% in 2022. Additionally, normalized EPS is expected to grow by 38.2% in 2021 and 3.3% in 2022.
Wall Street's TakeTurning to Wall Street, Meta Platforms earns a Strong Buy consensus rating based on 29 Buys and six Hold ratings in the past three months. The average Meta Platforms price target of $406.31 implies 22% upside potential.
Summary and ConclusionMeta Platforms is one of the world's largest and most influential companies as it commands a dominant position in the social media space. It has a pristine balance sheet and solid long-term growth potential. On top of that, the stock is priced relatively inexpensively relative to its historical averages, and Wall Street analysts are overwhelmingly bullish on the stock as well.
As a result, it looks like it might be a good time to add shares.
Disclosure: At the time of publication, Samuel Smith did not have a position in any of the securities mentioned in this article.
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