Meta stock underperformed the broader markets in 2022. The primary reason for Meta’s underperformance was heightened competition from its peers. As the short-form videos became a sensation on social media, Meta witnessed increased competition from TikTok and Alphabet’s (NASDAQ:GOOGL)(NASDAQ:GOOG) YouTube Shorts. While Meta is striving hard to drive engagement, it now faces increased competition in the VR (Virtual Reality) space from TikTok’s parent company, ByteDance.
A Wall Street Journal report highlighted that ByteDance’s Pico, which makes VR headsets, is gaining market share. The report highlighted that Pico’s shipments are growing rapidly, making it a formidable competitor for Meta.
On the other hand, Meta is expanding its offerings beyond 2D screens towards immersive experiences like virtual reality. During the Q4 conference call, the company said its VR ecosystem is growing. It now has over 200 apps on its VR devices, generating over $1 million in revenue.
However, with growing competition, Meta’s growth in the VR space might take a hit.
What is the Prediction for Meta Stock?
Meta stock has risen over 45% year-to-date. Investors cheered management’s focus on controlling costs, which will likely cushion its earnings in 2023. However, increased competition and pressure on ad spend due to macro headwinds continue to pose challenges.
In addition, Meta’s legal and regulatory risks are higher than those of peers. For Meta, legal and regulatory risks account for 21.3% of its total risks. This percentage is higher than the industry average of 18.7%.
Nevertheless, META stock sports a Strong Buy consensus rating on TipRanks, reflecting 34 Buy, six Hold, and two Sell recommendations. Meanwhile, analysts’ average price target of $215.20 implies 23.57% upside potential.
