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…