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Downward economic trends and industry-specific issues have hit the Facebook parent company particularly hard. Meta Platforms is the biggest social media company in the world, but is it a smart addition to your portfolio?
How to buy shares in Meta Platforms
- Open a stock trading account - We recommend using Betterment as it offers up to 1 year of free management with a qualifying deposit.
- Confirm your payment details - Add your payment method and fund your account.
- Research the stock - Search for the stock by name or ticker symbol - META.
- Decide the amount of shares - Now it is time to decide how many shares you want to buy of Meta Platforms.
- Purchase shares of META - Buy the amount of shares you want with a market order or limit order.
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About Meta Platforms, Inc.
Facebook, Inc. changed its name to Meta Platforms, Inc. in October 2021 to better reflect its various tech products and separate itself from Facebook’s antitrust suits and negative press.
It began trading under the ticker META on June 9, 2022. Meta is the parent company of Facebook, Instagram, and What’sApp. It also offers various tech services, including its own messaging platform, artificial intelligence (AI), virtual reality (VR) tech, and the umbrella linking them all, the so-called “Metaverse.”
Mark Zuckerberg, one of the founders of Facebook, serves as the company’s CEO. David Wehner is the Chief Financial Officer (CFO). Javier Olivan replaced Cheryl Sandberg as Chief Operating Officer (COO) in June 2022, though Sandberg still sits on the board.
Should I Buy Meta Platforms Stock?
Meta Platforms, Inc. (META) is the parent company of Facebook, Instagram, and What’sApp. With a $431 billion valuation, it’s an industry behemoth.
But stocks crashed 58% from their height in September 2021 and the company is facing an uncertain future. Fewer new users signed up across the platforms and users are spending less time on Facebook.
There’s growing concern that the world’s biggest social media platform is struggling to find new areas for growth. Moreover, competition, evolving security standards, and government scrutiny have taken a toll on the company.
Even allowing for recession conditions throughout the market, Meta is underperforming and it’s not a good time to buy Meta stock.
Meta Platforms Stock Price Today
- Meta platform’s revenue for 2021 was $117.929 billion, up 37% from the previous year. Despite some negative trends, Meta has ample resources to address them.
- Meta has $2.94 billion monthly active users (MAU) as of March 2022. Each MAU offers advertising potential.
- Rebranding under the Meta name signals that the company is broadening its industry reach and exploring areas for growth beyond Facebook.
- Meta has ambitions to tackle the virtual reality space and bring social media to the three-dimensional space. The launch of a VR headset later this year confirms that Meta is looking to different technologies to increase its valuation.
- Facebook is capitalizing on increased interest in non-fungible tokens (NFTs) and testing Facebook as a marketplace for digital collectibles.
- Despite the unpromising launch of Meta’s Reels product (more on that below), CFO David Wehner believes monetizing Reels with advertising will make substantial gains after 2022.
- Though users are spending less time on Facebook, they are spending more time than ever on Meta’s other holding, Instagram.
- Though revenue is down, some of the loss can be attributed to market-wide recession conditions and diminished power of the dollar.
- Meta is cutting spending to increase revenue while its revenue remains stuck.
- This year so far, Meta posted adjusted earnings of $2.46 a share. This earning posting is actually down 32% from a year proper. Revenue dropped a further 1% to $28.8 billion, the first year-over-year decline in revenue in the company’s history.
- For third quarter projections, Meta expects a range of revenue from $26 billion to $28.5 billion, in comparison to the prior year sales of $29 billion. There is growing concern that this dip may be part of a trend.
- According to the Q4 earnings report released on February 3, 2022, daily active users (DAU) fell for the first time. Confidence was so shaken that stocks dropped 26% in a single day.
- Despite four rally attempts since the February crash to its 50-day line (the latest on July 22, 2022), each one has failed.
- Turbulence in the market cannot be blamed for all of Meta’s recent losing streak. The company’s relative strength line, which measures stock against the S&P 500, recently sank to a seven-year low.
- Apple’s change in privacy standards has cost Meta Platforms, Inc. $10 billion since the spring of 2021. iOS users can now opt out of tracking activity across third-party sites, reducing Meta’s capacity for targeted advertising.
- Advertising rates dropped 15%, largely owing to users’ being able to opt out of app tracking. The company increased ad impressions by 15% to adjust for the drop.
- Direct competition from TikTok has siphoned off many younger users. Though daily users rose by 1%, that was offset by a sizable drop in time users spend on Facebook.
- Meta launched a new product called Reels to compete with the short-form videos that populate TikTok, but users were unimpressed. Instagram CEO Adam Mosseri said they were stepping back from the idea, so it’s unclear how that impacts the company’s strategic vision.
- The lackluster showing from Reels was a significant setback for advertising on the platform. Reels were intended to be interspersed with paid advertising, but low traffic has stymied the plan.
- The Federal Trade Commission (FTC) filed two antitrust lawsuits against Facebook in 2020 and 2021. Though the first suit was thrown out, the second is ongoing and poses a risk to the company’s profile. Facebook has faced criticism for suppressing competitors.
- In October 2021, whistleblower Frances Haugen testified before the U.S. Senate subcommittee for Consumer Safety and claimed that Facebook’s pursuit of profit put children and democracy at risk. Many consumers lost confidence in the product.
Meta Platforms Competitors
Meta Platforms is not a good stock to buy right now. Though allowances must be made for global downturns in the market, Meta is underperforming against index standards.
Slower growth in active users and new standards for privacy have limited Meta’s advertising potential. And mixed messaging about the company’s strategic vision leaves investors uneasy about plans for future growth.
The company’s emphasis on VR and NFTs is encouraging but it won’t see major gains any time soon. Instead of buying Meta stock outright, consider investing in an index fund or exchange-traded fund (ETF) that includes Meta stock.
A fund with holdings from many companies diversifies your portfolio and minimizes the risk of investing in one company.
Should you invest $1,000 in Meta Platforms right now?
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