Meta Platforms: Not As Bad As It Looks After Q4 Results And 26% Correction

(Preview) Company Update (FB US) (Buy)

Summary

• Meta stock fell by 26% on Thursday after Q4 results overnight. The stock is now trading at 16.9x 2021 EPS, with risks more than priced in.

• 2022 guidance disappointed, with Q1 revenue growth expected to be only 3-11%; TikTok and Apple iOS changes are the main factors.

• Q4 results were actually solid, with ad revenues growing 21% and user figures broadly stable; group EBIT grew 43% for the full year.

• Meta is facing real headwinds, but is responding early and aggressively; with its advantages and record, it should overcome the challenges.

• With shares at $237.08, we believe a total return of 89% (17.7% annualized) can be expected even with sharply reduced forecasts. Buy.

Introduction

Shares in Meta Platforms Inc. (formerly Facebook) are down 26% on Thursday (February 3) (as of 8 pm EST), after Q4 2021 results overnight.

We initiated our Buy rating on Meta in March 2019. Meta stock is now down 13% since the start of 2021, though still up 40% since our initiation.

Investors are clearly disapp…