Meta Platforms’ Stock Is Trading Close To Its Fair Value

META: Meta Platforms logo
Meta Platforms

Meta Platforms’ stock (NASDAQ: META) has gained 98% YTD, while the S&P500 is up only 8% over the same period. The stock price touched a 52-week low in the last quarter of 2022. However, it has seen a sharp recovery since then. It was because of several reasons, better than expected results in both Q4 2022 and Q1 2023, consistent growth in the user base, a strong business model, focus on optimizing costs, and a share repurchase program worth $40 billion.

The stock is currently trading around $239 per share, which is 4% above its fair value of $228 – Trefis’ estimate for Meta Platforms’ valuation. Its total revenues increased 3% y-o-y to $28.65 billion in the first quarter of 2023, beating the street estimates. Further, daily active users (DAUs) improved by 4% y-o-y to 2.04 billion for March 2023. Along with this, the firm repurchased $9.2 billion of common stock in Q1, as part of its share repurchase program. That said, the cost and expenses rose by 10% y-o-y, reducing the net income by 24% y-o-y to $5.7 billion. Notably, the expense figure includes charges related to restructuring efforts of $1.14 billion.

The top line marginally decreased to $116.6 billion in FY2022. The decrease was due to a tough macroeconomic condition, which negatively impacted advertising revenues. However, the DAUs still improved by 4% y-o-y. On the cost front, the net income was down 41% y-o-y to $23.2 billion. It was due to an unfavorable increase in research & development costs. 

Relevant Articles
  1. Meta Platforms Stock Dropped 10.6% In A Day, What’s Next?
  2. Up 36% YTD, What To Expect From Meta Platforms In Q1?
  3. Up 290% Since The Start Of 2023, Where Is Meta Platforms Stock Headed?
  4. After More Than 150% YTD Gain, Meta Platforms to Post Mixed Results In Q3
  5. Meta Platforms Stock Topped The Consensus In Q2, What’s Next?
  6. What To Expect From Meta Platforms In Q2?

Moving forward, we expect the growth rate of advertising revenues to recover over the subsequent quarters. Notably, META expects the Q2 revenues to remain between $29.5-32 billion. Overall, we estimate Meta Platforms’ revenues to touch $122.4 billion in FY2023. Additionally, the adjusted net income is likely to remain around $25.73 billion in the year. This coupled with an annual EPS of $10.02 and a P/E multiple of just below 23x will lead to a valuation of $228.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Apr 2023
MTD [1]
YTD [1]
Total [2]
 META Return 13% 98% 107%
 S&P 500 Return 1% 8% 85%
 Trefis Multi-Strategy Portfolio -1% 7% 237%

[1] Month-to-date and year-to-date as of 4/28/2023
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates