Meta Platforms Inc. (NYSE:META), the parent company of Facebook, hasn’t exactly been a standout stock so far in 2022. In fact, the stock is down more than 50% from its late 2021 high, according to SeekingAlpha.com.
So why are more analysts suddenly viewing the battered stock in a favorable light? Well, there are three reasons.
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A commitment to cutting the fat & getting leaner.
A declining stock price has pushed Meta Platforms (NYSE:META) CEO Mark Zuckerberg to take a hard look at his company’s operations and seek to eliminate poor-performing staff and cut “excess fat” within the organization.
This renewed focus on streamlining operations and obtaining greater cost control could soon power the beaten-down stock to new heights.
For example, the company recently announced plans to do away with its Novi Digital Wallet in September. The wallet was part of the company’s cryptocurrency push that never seemed to get very far off the ground.
The company, instead, will focus on NFT, non-fungible tokens. It also plans to use its Novi wallet technology in various metaverse-related projects.
One analyst who sees the company’s cost-cutting efforts positively is Cleo Capital Managing Director Sarah Kunst. She recently told CNBC that while there may be a path where cutting costs does not impact stock price …
There is another, possibly more likely path, where the efforts to tighten the ship at META could be a significant stock price booster.
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The growing popularity of the metaverse.
Meta Platforms (NYSE:META) has bet big on the metaverse, an integrated network of 3D virtual worlds.
The company’s approach to the metaverse is similar to when it went “all in” on mobile marketing approximately ten years ago. Many experts back then thought Zuckerberg was nuts for focusing so much on mobile marketing when it wasn’t generating significant revenue for the company.
But Zuckerberg’s vision proved accurate, and mobile marketing became a significant profit producer for Facebook. Now, if Zuckerberg is right again, this time about the metaverse, his company could soon see another big spike in profits.
Already, Precedence Research is projecting that the global metaverse market will reach 1.6 trillion by 2030 with a compound annual growth rate (CAGR) of 50.74%.
Thanks to its early mover advantage, Meta Platforms (NYSE:META) could be positioning itself to be a major player in what could be a massive market.
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META is now being seen as a value stock.
As Kunst told CNBC, “(NYSE:META) is being seen as a value stock … and that’s pretty unprecedented from what we’ve seen in the last few years of these tech stocks.”
A value stock is a stock that appears to be trading at a lower price than what its fundamentals, such as dividends, earnings, and sales, suggest it should be trading at.
META’s value will increase even more if it can mine value from the metaverse.
For instance, the company could follow the path of Alphabet, the parent company of Google (GOOG), and become more diverse in its service offerings.
It could also create a powerful new tech-related revenue stream, like Amazon (AMZN) did with Amazon Web Services (AWS).
It all depends on how Meta Platforms (NYSE:META) reacts to these current challenging times, and for investors, that means asking how much faith you have in the company’s leadership to pilot it back to higher levels of success.
If you believe in Zuckerberg and his vision, this could be a good time to invest as the company’s stock price is lower than it has been in quite a while.
In other words, investors who seek to “buy low and sell high” and have an eye toward the future might want to take a closer look at what is happening at Meta Platforms (NYSE:META). The stock was at $167.51 during early trading on July 6.
Featured Image: Megapixl @Andranik1990
