![]() ![]() Meta was blindsided by changing economic conditions driven by high inflation, interest-rate hikes, and changing customer behaviors after ramping up staffing and spending during the pandemic years. For the full year, revenue dropped by 1% to $116.6 billion from $117.9 billion in the prior year. Meta posted $32.2 billion in revenue in the fourth quarter of 2022, down 4% from the $33.7 billion it registered in 2021. Meta shares fell from a high of $379 in August 2021 to a low of about $88 by October 2022, a 77% drop. Meta’s recent stock gains mark a stunning comeback after an equally surprising reversal of fortune to the downside in 2022 as the company reported its first-ever sales decline amid serious challenges to its business model. Potential for monetizing its Reels short-video features.Improvements in measuring the effectiveness of ads on its platforms. ![]() Mogharabi lists three developments that bode well for Meta stock: Meta trades at 9.4 times 2023 consensus adjusted estimates for enterprise value to EBITDA, and 8.1 times 2024 estimates, well below the 12 times 2023 and 10 times 2024 estimates on which Mogharabi’s fair value estimate is based. “Despite the runup, there’s still more upside,” says Ali Mogharabi, Morningstar senior equity analyst for media and telecom, noting the stock trades at a 20% discount to the fair value estimate of US$260 per share he has maintained on Meta stock since it reached seven-year lows last fall. Facebook is the largest social network in the world, with nearly 3 billion active users. Meta is the social media company formerly known as Facebook it also owns the Instagram platform and instant messaging networks WhatsApp and Messenger. ![]() company, users and content creators could move to other platforms, including Meta, bringing advertisers with them. Amid threats of banning TikTok in the United States, or selling its U.S. Rival TikTok’s woes also could wind up being Meta’s gain. That’s critical because digital advertising composes about 90% of Meta’s revenue. Improvements in Meta’s ability to measure the effectiveness of ads that run on its platforms should also help boost revenue. “Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization,” Zuckerberg said.Around its current price of US$213 per share, Meta stock continues to be attractively valued, some say, especially with its new focus on keeping costs down. Meta has also downsized its staff by a hefty 13%, though this most recent quarter doesn’t factor in those 11,000 jobs that the company cut in November. “But my main focus is on increasing the efficiency of how we execute our top priorities.” “We’re going to be more proactive about cutting projects that aren’t performing or may no longer be as crucial,” Zuckerberg said in the earnings call. Meta took a notable beating in 2022’s market turndown, losing as much as 60% of its value over the course of the year. Those gains combined with Meta’s aggressive cuts and its promise of an efficient 2023 drove stock prices up around 15% in trading after-hours. Facebook’s user numbers also managed to inch up in the last quarter with the platform hitting 1.98 billion daily active users and 2.96 billion monthly active users as of September 2022. The company beat revenue expectations in the final quarter of 2022, bringing in $32.2 billion. ![]() In its Q4 earnings call on Wednesday, Meta CEO Mark Zuckerberg described the company’s near future priorities and plans, painting a picture of a tech giant that’s driving toward leaning down and speeding up. Meta is all-in on becoming a lean, mean, cash-printing machine. ![]()
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