Meta Stock Rose as Its Market Valuation Got Close to $500 Billion

Meta Stock

Meta Stock (NASDAQ:META)

On Thursday, Meta Platforms (NASDAQ:META) stock jumped about 25% at midday when the business, helmed by Mark Zuckerberg, reported better-than-expected profits and projections for the fourth quarter.

Immediately after Meta’s earnings report was released, Wall Street analysts rushed to boost the Meta stock and laud the social media giant for its “year of efficiency.”

According to Rosenblatt Securities analyst Barton Crockett, Meta now has the “durability” to obtain multiple premium earnings. Hence he has upgraded the Meta stock from neutral to buy and increased his price objective from $104 to $220 per share.

Crockett said in a note to investors that since Meta reaches 3.74 billion people every month, it has a resilience that, in the long run, might impose a premium multiple. Crockett said that Meta’s (META) monthly reach is equivalent to 47% of the global population to further underscore the company’s global position.

Crockett also noted that Meta’s lack of debt means it may potentially undergo a larger share buyback if it adopts a more traditional debt-to-equity ratio.

The Meta quarterly report and projections included an announcement of a new $40B share repurchase program.

Because of the more productive outlook of the company’s leadership, Justin Post, an analyst at Bank of America, upgraded Meta stock to buy from neutral and increased his price objective for the stock to $220 from $160.

Post said to clients in a note that “the stock is now positioned for leverage [and] EPS upside as the ad environment improves.” In addition, he said, things are looking up since more people are using Reels and fewer people are using ByteDance’s TikTok.

Post speculated that Meta (NASDAQ:META) may become a bet on a “multi-year artificial intelligence [and] machine learning development cycle” based on the company’s comments on its earnings call about increases in ad conversions.

As Doug Anmuth of J.P. Morgan notes, Meta is “developing crucial muscle” to run as a disciplined corporation. He has reaffirmed his overweight rating on META and boosted his price objective to $225 per share.

Anmuth emphasized that the company will benefit from the newfound discipline in the long haul, not only in the next year.

Following the results, investment firm Piper Sandler also raised Meta, changing its rating from neutral to overweight and increasing its share price objective from $190 to $215.

Meta (NASDAQ:META) reported a quarterly profit of $1.76 per share on revenue of $32.17 billion, with the company’s family of applications, which includes Facebook, Instagram, and WhatsApp, contributing $31.44 billion to total revenue.

The consensus estimate among financial experts was for Meta to post $2.23 a share in earnings on $31.69B in sales.

In addition to exceeding expectations, quarterly revenue from the company’s Reality Labs division was $727 million.

Alphabet, Pinterest, The Trade Desk, Roku, and Digital Turbine all saw significant gains after the announcement of the results of their respective ad campaigns (APPS).

After the market closes today, Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) will release its quarterly earnings report.

Zuckerberg said that strong engagement in its applications is evidence of the progress Meta is making on its artificial intelligence discovery engine and Reels. Meta is “focused on building a stronger and more agile organization,” he said, in keeping with the company’s management theme for 2023, which is the “Year of Efficiency.”

With a “large majority” of the roughly 11,000 staff it stated would let go this past November, Meta concluded the fiscal year with 86,482 personnel.

Meta forecasts first-quarter sales of $26 billion to $28.5 billion, which is higher than the $27.25 billion predicted by analysts.

Due to slower payroll expenditure growth and cost of sales, Susan Li, CFO of Meta, has predicted that the company’s full-year costs in 2023 would be between $89B and $95B, down from an earlier projection of $94B to $100B.

On Wednesday, a federal court ruled against the FTC, allowing Meta Platforms to acquire virtual reality business Within Unlimited.

Featured Image: Unsplash @ Dima Solomin

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About the author: I'm a financial journalist with more than 3 years of experience. I have worked for different financial companies and covered stocks listed on ASX, NYSE, NASDAQ, etc. I have a degree in marketing from Bahria University Islamabad Campus (BUIC), Pakistan.