1. Meta Platforms Inc. (NASDAQ:META)
Number of Hedge Fund Holdings: 184
YTD Decline (As of October 29): 70.70%
Based in Menlo Park, California, Meta Platforms Inc. (NASDAQ:META) is an American multinational technology conglomerate which owns popular social media sites like Facebook, Instagram, and WhatsApp, among other products and services. Although the company’s Q3 2022 earnings report was dismal, with shares plummeting to 70.70% year-to-date as of October 29, the company is still highly lucrative to support its high-potential bets in the long-term. The addressable markets of the company’s VR initiatives are beyond video games and social networks, and the timeline to capitalize on these highly nonlinear potentials is closer than the market recognizes, given the recent advancements in AI and VR algorithms.
On October 28, MKM Partners analyst Rohit Kulkarni lowered the price target on Meta Platforms Inc. (NASDAQ:META) to $140 from $195, keeping a Buy rating on the shares. The analyst noted that Meta Platforms Inc. (NASDAQ:META) posted a favorable upside in Q3 2022 revenue, with impressive growth in engagement and active users. The outlook for 2023 returns imply a substantial step-up relative to expectations and though the stock may not see any relief in the near-term, with engagement continuing to rise, the company has turned a monetization corner with rising contributions from messaging ads, reels, and WhatsApp ads.
Here is what Wedgewood Partners had to say about Meta Platforms Inc. (NASDAQ:META) in their Q3 2022 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) detracted from performance during the quarter. Meta’s advertising revenue grew +3% (currency-adjusted) over 2021 and is up +70% since 2019 (pre-pandemic). The shift of advertisers and consumers to social media has been fairly dramatic and sticky. The Company reported $2.88 billion “daily active people” of its Family of Apps (as of June 2022) and is +35% higher than the comparable month pre-COVID (June 2019). Meta also serves over 10 million advertisers which is up from 8 million in January 2020. In spite of these impressive gains, the stock now trades at absolute levels well below where it traded before the pandemic. We suspect much of the market’s concern revolves around slowing revenue growth. It is fairly evident that there was a tremendous pull-forward of demand for many businesses and services over the past couple of years, and that the normalization of revenue growth from that “pull-forward” is hardly an existential crisis. Further, while Meta’s profit margins have fallen below pre-pandemic levels, it’s important to note that the Company likely hired well in excess of what it needed because it assumed the pandemic induced growth would continue. Meta has plenty of room to moderate its expense base and drive significant value by repurchasing shares at today’s historically depressed multiples.”
Follow Meta Platforms Inc. (NASDAQ:META)
Follow Meta Platforms Inc. (NASDAQ:META)
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