Meta Platforms Stock: Is it a Steal of a Deal at $650?
The social media stock has been declining since posting its latest earnings numbers last month.
Meta Platforms (META) stock has experienced significant fluctuations this year, with a range from nearly $780 to $520. While some view it as a growth machine, others find the aggressive pursuit of new opportunities concerning due to high capital spending. Recently, the market sentiment has turned bearish on Meta's stock, as its latest quarterly results were not strong enough to support a higher valuation. The stock is currently trading around $650, down close to 20% from its high.
Despite a solid performance in the third quarter, with sales rising 26% and beating expectations, Meta's stock remains under pressure due to concerns about high spending. During the quarter, the company's free cash flow turned negative, with $2.1 billion leaving its business as capital expenditures exceeded cash flow from daily operations.
The company has been heavily investing in artificial intelligence (AI), particularly with the introduction of its personal AI agent, Muse, designed to assist with everyday tasks. However, the success of this endeavor remains uncertain, given the company's mixed track record in data privacy.
Meta's current forward price-to-earnings multiple of 18 is attractive, but the company has faced challenges in recent years, including scrutiny from lawmakers over children's safety on its platforms and broader data privacy concerns. These long-term risks may warrant a larger discount for the stock than its current trading price. While Meta's stock currently appears cheap, it may be wise to exercise caution before rushing to buy.
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