The recent selling in Meta Platforms (NASDAQ:FB) stock has wiped out a significant portion of its market cap.
It’s worth noting that Meta Platforms stock has declined by 39.5% this year, reflecting a slowdown in its user growth amid increased competition. Meanwhile, Apple’s (NASDAQ:AAPL) iOS privacy changes negatively impacted its ad targeting, and in turn, its financials.
Facebook’s parent Meta Platforms is also battling headwinds stemming from supply-chain issues, slowing e-commerce growth, and labor shortages, which are taking a toll on ad spending and impacting its revenues. Moreover, the company’s activity shift towards short-form videos like Reels (videos have been slower to monetize) remains a drag.
What’s Ahead?
It’s worth noting that Apple’s privacy changes could significantly impact ($10 billion headwind) Meta Platforms’ financials in 2022. Further, the increased competitive activity could impact its user growth.
While Meta Platforms faces headwinds in the near term, Jefferies analyst Brent Thill sees most of these headwinds priced into the stock. Meanwhile, he finds Meta’s stock valuation compelling post the recent selloff.
Thill stated, “Most investors are already bracing for the bear case of declining EPS (street est. -5% in FY22), weakening engagement, ongoing privacy and regulatory headwinds, and monetization pressure from the transition to Reels (from Feed/Stories). We believe the stock reflects many of these headwinds and is compelling with the P/E multiple now at its largest ever 50% discount to the NASDAQ.”
Thill has a Buy rating on FB stock with a price target of $350, which signifies solid upside potential of 72% from current levels.
Besides Thill, most Wall Street analysts are bullish on FB stock. However, they remain cautiously optimistic given the near-term challenges. Meta Platforms stock has a Moderate Buy consensus rating based on 31 Buy, 13 Hold, and 1 Sell recommendations.
Investors Buying the Dip
The correction in FB stock has led investors who hold portfolios on TipRanks to accumulate the stock. Per TipRanks’ Stock Investors tool, 13.6% of these investors have increased their exposure to FB shares in the last 30 days.
Further, due to the recent pullback in its price, FB’s stock price forecast on TipRanks shows significant upside potential. The average Meta Platforms price target of $332.93 indicates 63.6% upside potential to current levels.
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