Is Meta Platforms Stock Fairly Priced?

stock of meta platform (NASDAQNDAQ
: META) has slipped 51% YTD, while the S&P500 is down 23% over the same period. The stock market experienced solid growth following the March 2020 fall, and high-growth technology stocks took a major advantage. However, broader markets, especially technology stocks, have faced selling pressure in 2022. This was due to record-high inflation figures, aggressive interest-rate hikes and geopolitical tensions.

Meta stock is currently trading around $164 per share, down 46% from its fair value of $303 — Trefis estimates Meta Platform Evaluation, The social media giant reported mixed results for the first quarter of 2022, with earnings falling below expectations, but revenue down. It registered growth in both the advertising and reality lab segments. In addition, its two key metrics, daily active users (DAUs) and average revenue per user, also reported growth in the quarter. That said, investors are somewhat cautious about the stock, as the current macroeconomic environment could push the economy into recession. This will likely hurt the company’s advertising revenue, which contributes more than 95% of the top line.

Company revenue grew 37% year over year to $118 billion in 2021, driven by DAU growth and worldwide annual ARa R
In addition, it grew 35% year-over-year in adjusted net income to $39.4 billion. Going forward, we expect to see continued growth in key metrics, thereby Meta platform revenue To touch $130 billion in FY2022. Additionally, Meta’s adjusted net income is expected to be approximately $36.6 billion. This combined with an annual EPS of $13.12 and a P/E multiplier of above 23x would yield a valuation of $303.

Here you’ll find our previous coverage of Meta Platform stocks, where you can track our outlook over time.

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