Meta Platforms: Okay Q3 Results, Terrible Investor Messaging
(Preview) Company Update (META US) (Buy)
Summary
Meta stock fell 25% after Q3 results to where it was in 2016. We believe this was due to poor messaging and the results were fine.
Meta's 2.6% ex-currency ad growth was adequate against the macro backdrop, and progress is being made against TikTok and Apple.
Large cost increases guided for 2023 are largely the result of hires already made, while the large CapEx is not Metaverse-related.
Meta is in fact keeping headcount flat for the next few quarters and is likely targeting a return to EBIT growth after 2023.
At $97.94, shares are at 7x 2021 EPS. Simply returning to 2018 earnings, and a 20x P/E would result in an 88% gain (21.9% annualized). Buy.
Introduction
Meta Platforms, Inc. (formerly Facebook) shares fell 25% today after reporting Q3 2022 results overnight. At $97.94, META stock is now back to a level last seen in 2016.
Meta shares have now lost 43% since we initiated our Buy rating in March 2019 and 75% since its peak last September.
We see Meta's share price collapse today as …