$META - Good Price or Gd Company ? Return Of FAANG ?
My afterthoughts to Tiger_chat 's question of whether an investor profits from a good company or a good price ?
"Why not both" I asked myself ?
Wouldn't there be more upsides comparatively speaking ?
Having put the theory to test on (1) Facebook rival - Snap, (2) Visa & Mastercard (3) Tesla, General Motors (4) Netflix (5) AMD, Lam Research, Intel and (6) JP Morgan & Morgan Stanley; time to try it on a FAANG stock no ?
Gonna put $Meta Platforms, Inc.(META)$ to the test & see if it fits the bill.
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- Formerly known as Facebook is an American multinational technology conglomerate
- Founded in 04 Jan 2004 (19 years young company)
- Founders were Mark Zuckerberg, Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes
- Listed on Nasdaq on 18 May 2012 at $38 per share; making it one of the biggest in technology & Internet history, with a peak market capitalization of over $104 Billion
- It owns Facebook, Instagram, and WhatsApp, amongst a host of other products & services
- Meta was once one of the world's most valuable companies.
- As of 2022, it is not one of the Top 20 biggest companies in the US.
- It is considered one of the Big 5 American information technology companies, alongside Alphabet (Google), Amazon, Apple & Microsoft.
- As of 2022, it is the least profitable of the 5 US Tech giants.
In 2022, a year where US market has been hammered by extreme volatility and ease of covid pandemic restrictions - how did Meta Platform fare ?
Current stock price < 03 Feb 2022 stock price by -20.6%; has upside potential ?
Meta Platform - Q4 2022 Earnings Summary
- Total revenue came in at $32,165 Billion vs $31.53 Billion (Wall St expectations) vs $33,671 Billion (Q4 2021); thats a -4.47% decline
- Net income came in at $4.65 Billion vs $10.29 Billion (Q4 2021); thats again another -54.81% decline
- Earnings per share was $1.76 vs $3.67 (Q4 2021); thats a -52% decline
- Income from Operations was $6.39 Billion vs $12.59 Billion; thats a -49.25% decline
Meta Platform - Advertising Revenue by Region
- Its common knowledge that Meta's main revenue comes from advertisers' dollars
- It is a miracle that this Social media giant is still able to hang onto majority of its advertisers despite the blunder-venture into Metaverse; shows how much clout Meta still wields
- With the Biden administration expected to formally lift all restrictions on Covid by May 2023, it remains to be seen how Meta wil be able to once again canvas for more advertiser dollars
Meta Platform - Net Income for Year 2021 & 2022
- Its 2022 Net income is a shadow of its 2021's.
- The economic situation (eg. High labour costs during the pandemic) has definitely eaten into the income, coupled with the falling revenue from advertisers all played out in the Net income quotient.
- Again into 2023 as every country tries to pick up from where it has left off in 2020, how quickly will Meta be able to capitalise on this "energy" is left to be seen.
Meta Platform - Daily Active Users (DAU) breakdown
- Like any other social media apps, the asset is of course the members' base and the "bond" between the apps and its members.
- For this, Meta has fared better in Q4 2022. Its DAU of 2 Billion vs 1.99 Billion expected, according to StreetAccount - gives both investors and advertisers (more importantly) the confidence that Meta still has what it takes
Meta Platform - Other highlights
- Still cannot wrapped my head around the escalating expenses experienced by a lot of Tech and Financial institutions in 2022. Was the increase due to incessant hiring or salary adjustments ?
- In the case of Meta, it ballooned by +22% to $25.7 Billion.
- Correspondingly, its no wonder that staff headcount registered a +20%.
Meta 's CEO on Q4 2022 Results
Our community continues to grwo and I'm pleased with the strong engagement across our apps. Facebook just reached the milestone of 2 Billion daily actives. The progress we're making on our AI discovery engine and Reels are major drivers of this. Beyond this, our management theme for 2023 is the "Year of Efficiency" and we're focused on becoming a stronger and more nimble organisation. Meta Platform, CEO, Mark Zuckerberg.....
Is Meta Platform Still A Good Price and Good Company ?
- As an IT giant in the Technology space where one day you're in and the next day you're out - Meta seemed to be holding onto its ground quite well
- This despite the blunder committed by Mr Zuckerberg by taking the company headlong into its the Metaverse without due considerations
- Stock price wise, there is still a potential upside gain of approx +20% no ?
- After non-stop hiring in 2022, it is now in the process of "firing" and laying off staff to the tune of 11,000; with a "human" touch approach.
- With that total expenses in 2023 will be in the range of $89 billion to $95 billion, that would be lower than its prior outlook of $94 billion to $100 billion. Good news ?
- Similarly, it is also lowering its capital expenditure estimates for the year to be in the range of $30 billion to $33 billion, down from $34 billion to $37 billion.
- This will be achieved thru spending less money on data center construction and instead, shift to a different kind of data center architecture intended to be more cost efficient while acting as the backbone of its various artificial intelligence projects.
- Perhaps the most important piece of the puzzle in 2023 will be Mr Zuckerberg's authorized a $40 Billion increase to its stock repurchase plan. This definitely "sets the tone" in terms of self-confidence that the company has on itself.
- Already, the company bought back $27.9 billion worth of its shares in 2022.
How Do Both Rivals Stacked Up Against Each Other ?
Snap vs Meta stock price on 01 Feb 2023
- Its a tale of 2 cities right.
- Both social media stocks did not exactly hand in an excellent earnings report
- Yet the fate of each stock were dealt with differently by the market or wall street
- Does this indicate the return of the FAANGs ?
- Will 2023 see further inroads to be made by Tik Tok instead ?
- Do you think Meta is backed for good ?
- Do you think it will be able to better itself in 2023 as the Covid restrictions start coming down ?
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