META: Time to buy the dip?
Meta has been on a consistent downtrend the past year. The past four quarters have been awful for Meta, with shares plummeting. Meta, formerly known as Facebook, is a social technology company. Revenue comes mostly from advertisements on its main products: Facebook and Instagram. Over the past few years, Meta has been developing new products for future markets. This article will explore the history of Meta, how it’s markets are changing, and how investing in Meta could be an opportunity.
Let’s take a look at the past year of Meta’s stock. Around one year ago, META held a value of around 340. As of market close 11/4, that number is 90.79, reflecting a drop of around 73%. So what caused this? The main reason is a continued drop in revenue and growth outlook. Meta peaked in 2021 due to the increase in internet related activities due to the effects of COVID-19. Revenue for 2021 was 117.9B, up from 86B in 2020 via Market Watch. Looking further into the financials, over the past five years sales/revenue have been on a continued incline. However, net income has dropped consistently when we take a look at quarterly data for 2021/2022. Basic EPS has also fallen in nearly every quarter this past year; dropping from 3.67 to 2.47.
Beyond the financials, let’s see what Meta has been doing well. Facebook and Instagram are still dominant in the social media scene. Facebook remains at the top of active users, with an estimated 2.9 billion, and Instagram has around 1.5 billion (as of January 2022 via Statista).
Now let’s look into why Meta might deserve a second look. Meta has been formulated a new market and product line since 2014, when it acquired Oculus VR for $2B. Since then, Meta has been continuing to grow this phenomenon known as the Metaverse: a virtual world where users can live in an alternative universe through the lenses of a virtual reality headset. So how does this affect the future of Meta, and how can this lead to an investment opportunity? Meta has bet big on Virtual and Augmented Reality; and has the expectation that it will be able to compete with a variety of industries. Video games, fitness, social media, and work related activities have already been integrated into Meta’s current line of virtual reality headsets which consists of the Oculus Quest 2 and Quest Pro.
While no official numbers were released, it is estimated Meta has sold around 10–15 million VR headsets, and has done 1.5B in purchased software sales since 2019. So why has Meta put so much into the Metaverse and VR? It would appear that they see a market in the future that has not been widely adopted by the public quite yet. Does Meta deserve a second look when it comes to investing? We recommend you do your own research (DYOR) and check out Meta’s Connect Keynote here for more information on the current state of the Metaverse and Meta.
All information in this article is for educational purposes only and is not to be considered financial advice. Do your own research and consult a financial advisor for advice.
