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 Cheap
With 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 Ambitions
Meta 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 Take
According 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 Stock
The 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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