4. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 200
Meta Platforms, Inc. (NASDAQ:FB) formerly known as Facebook is the largest social media conglomerate in the world.
Vulcan Value Partners, an asset management firm, discussed Meta in their Q4, 2021 investor letter and here’s what they said:
“Meta Platforms, Inc. (NASDAQ:FB), the parent company of Facebook, reported excellent operating results in 2021. Its revenue increased 37%, operating earnings increased 40%, and the company generated $40 billion of free cash flow. Despite these excellent results, Meta experienced extreme volatility in its stock price during the first quarter. We believe that two factors are responsible for this volatility. First, the company quantified the headwind to revenue from Apple’s recent privacy changes in the amount of approximately $10 billion for 2022. Meta is rebuilding its advertising technology, and we believe the long-term headwinds from Apple’s privacy changes will be limited because Meta will create a suitable solution. Second, Meta Platforms, Inc. (NASDAQ:FB) continues to invest heavily into its Reality Labs segment, also known as the metaverse. While we believe the metaverse presents great opportunity for Meta, we are not assigning any value to it in our valuation work. While 2022 may be challenging for Meta, the company’s competitive advantages are still intact, and the company trades at a significant discount to our estimate of its intrinsic value. Despite our concerns about a possible recession, we expect Meta to return to double-digit bottom line growth next year.”
On June 1, Morgan Stanley analyst Brian Nowak lowered the price target on Meta to $300 from $330 and kept an ‘Overweight’ rating on the stock.
Meta’s famous social media platforms include Facebook, Instagram and WhatsApp. The company’s social media user-base is over 3 billion as of 2022.
In October 2021, the CEO of Meta announced an ambitious plan to evolve Facebook to a virtual reality ecosystem, they called the metaverse. In the following years, it was reported that Meta is building a powerful AI accelerated supercomputer in order to boost transition towards the metaverse.
The company also acquired Oculus, a virtual reality technology company in 2014 that amalgamated with Meta’s reality labs to produce hardware and software for virtual reality. FB’s fundamentals establish it as a value stock with a low P/E ratio of 14 as of the first quarter of 2022. The company also relies less than half on debt as compared to equity and has a current ratio of 2.8, lowering long term as well as short term risks. The consensus EPS forecast is $16 for December 2025.
