Big Tech YTD Stock Price
Meta Platforms Inc. (NASDAQ:meta) continued to fall after its Q3 2022 earnings release, with YTD plummeting -73.74% to a broader market disruption of -22.48% for the S&P 500 Index.but Amazon(AMZN), alphabet (goog)(Google), and Microsoft (MSFTMore) may have suffered relatively modest discounts in the past, but Apple (AAPL) likewise loses -23.70% of its value at the same time. The time of greatest pain has not yet come.
Nonetheless, given the encouraging signs we’ve seen so far, we assume the meta’s long-term trajectory remains solid.
1. Monetization is improving exponentially
Meta continues to report improved monetization of Instagram reels, with annual revenue exceeding $1 billion to date. Combined, given his $3 billion run rate, the company’s Facebook platform is performing well as well. The company is also expanding reel consumption with a staggering 50% growth compared to six months ago, with 140 billion reels being played on Facebook and Instagram every day.
Additionally, Meta has partnered with Salesforce (CRM) Include WhatsApp/Messenger/Instagram Direct as paid messaging/Click-to-Messaging ads for online businesses. WhatsApp alone saw a staggering 80% year-over-year increase in run rate to $1.5 billion, and combined annual revenue from its three messaging platforms increased by $9 billion. In addition, JioMart, a WhatsApp model, has great potential to build a comprehensive business communication/e-commerce/payment ecosystem on WhatsApp/app family in the next few years, and we expect it to be rapidly replicated around the world. Why not?
Additionally, Family of Apps engagement continues to be strong, with 3.7 billion monthly users. WhatsApp alone boasts his 2 billion daily active users, Facebook has almost 2 billion daily users, and Instagram reports that his monthly users are at surpasses his two billion. It doesn’t take a crystal ball to speculate that meta monetization is actually very successful. The withdrawal effect from Twitter (TWTR) When Potential ban on TikTok in the US.
2. The investment is balanced and promising
R&D expenses relative to revenue
During the LTM period, Meta spent 27.4% of its revenue on R&D efforts. This indicates a focus on app families, Reality Labs, and full adoption across marketing/sales/G&A, rather than simply misrepresenting the Metaverse. The company is clearly actively developing AI capabilities, ads, click-to-message ads, and reels to TikTok. With a devastating $10 billion headwind from AAPL’s privacy changes, it’s clear that R&D efforts are paramount. In addition, 82% of expenses in Q3 2022 We focus on developing and operating a family of apps. Based on the table above, it’s clear that Meta isn’t overspending on its R&D efforts compared to other social media companies like TWTR and Snap (snap).
Meta also led an increase in Reality of Labs expenses for fiscal year 2023, but this should be money well spent to ensure Meta’s leadership in a highly competitive market. prize. You can refer to our previous analysis here: Apple Vs. meta: mixed reality battles. Even Nvidia (NVDA) are heavily invested in Omniverse, so far, easily pouring 21.22% of its revenue into R&D efforts. We continue to believe in Zuckerberg’s passion and vision of the Metaverse. Connect 2022Market enthusiasm peaked last year when Meta announced the Metaverse, and as a result, we are starting to see the payoff of that investment that died tragically amidst these peak recession fears.
Metaverse applications are powered by Roblox (RBLX) or Horizon World. As more and more tech giants adopt remote work post-pandemic, these capabilities will be used for virtual AI training, holographic video calling, large-scale industrial/design/engineering/architectural simulations, revolutionizing scientific discovery, and enhancing 3D workflows. is expected to grow as a B2B application for Globally. Meta will get there sooner than expected, given its expanded partnerships with MSFT, Adobe (Adobe), Autodesk (ADSK), zoom (ZM), Accenture (ACN), others. Don’t be shortsighted like Mr. Market.
Capital investment from operations to cash
Additionally, Meta’s data center and reality lab capital expenditures are still relatively modest so far compared to other cloud/e-commerce peers such as AMZN, but are naturally high compared to GOOG and MSFT. Become.
In the meantime, I’m not at all worried about this level of investment. The company continues to report a strong FCF generation of $26.4 billion in his LTM against AMZN’s -$26.32 billion, GOOG’s $62.54 billion and MSFT’s $63.33 billion because time. Even with such impressive numbers, the latter two couldn’t escape the ongoing carnage with their share prices plummeting YTD of -42.45% and -36% respectively. It’s tragic because we expect an ambitious expansion of the recession-time meta to do very well once the macro economy recovers and market sentiment improves.
3. FCF profitability will improve
Meta is expected to report adj. Revenue and Adjusted Net Income growth at his CAGR of 13.9% and 3.6% from FY2019 to FY2025 respectively. Also, as seen in the stock market crash, the company’s forward execution has now been significantly reduced to -22.35%. EBIT/net margin expected to deteriorate further to 41%/34.8% in FY2019, 39.6%/33.4% in FY2021 and 24.1%/19.7% in FY25, justifying some discounts I think it will.
This puts Meta’s 2025 EPS at $4.56 in 2019 at a pre-pandemic CAGR of 26.5% and $13.77 in 2021 at a CAGR of 26.8% during the pandemic. An annual CAGR of -10.1%, which naturally explains the slowdown to $12.12. .
Meanwhile, Meta is expected to report a significant year-on-year increase of 87.08% in FCF generation in FY2024 once expenses normalize and advertising spending fully recovers. Investors should also note the continued improvement in FCF profitability from 30% in 2019, 33.2% in 2021 and finally 39.7% in 2025. . This will reduce the company’s need to rely on debt from 2024 onwards.
In case anyone forgot, AAPL recently reported a staggering $98.95 billion in long-term debt and $29.3 billion in annual interest expense on its Q4 2022 earnings call. did. These figures increased by 7.78% and 6.15% from the third quarter of 2019, while net debt increased by 62.57% to -$3.662 billion, while cash/short-term investments decreased further by -51.96%. increase. This reflects AAPL’s increased reliance on debt and reduced liquidity over the past three years.
So does meta need to beat just $10 billion of debt reported in Q3 2022? Given that, in the meantime, I recommend reading my previous articles on Meta. It helps to better understand the meta position and market opportunities.
- meta platform: Absolute Carnage – Can’t See Floor
So are you buying Metastock?sell, or hold?
Meta 10-Year EV/Revenue and P/E Valuation
Meta is currently trading at 1.90x EV/NTM earnings and 12.35x NTM P/E, a decade low. His stock is also trading at $88.91, down -74.87% from a 52-week high of $353.83 and approaching a 52-week low of $88.41. Nonetheless, the consensus estimate remains bullish on Meta’s prospects, given the $153.85 price target and a 73.04% rise from current prices.
meta 10 year stock price
It is clear that there are no clear floors and supports here. Meta’s share price continued its steep decline of -31.51% after its Q3 2022 earnings release, significantly exacerbated by pessimistic market sentiment.
The latter is due to an unfortunate hawkish reversal of the Fed’s rumored turnaround. bank of canada50 basis points hike earlier than expected.Early signs already point to similar rising inflation October can see disastrous CPI/PPI results for October and November.As 48% of analysts With another 75 basis points of rate hikes expected at the Fed’s December meeting, more pain is undoubtedly ahead.Terminal charges are already provisional 5.14% in June 2023This points to another 50 basis points of rate hikes at the February 2023 Fed meeting.
Combined with Meta management’s pessimistic guidance through 2023, it’s easy to speculate that Meta could fall further to $70 over the next two months. Bottom fishing investors are advised to wait a little longer and load up at that point. However, most of the pessimism is already woven in, so we choose to nibble at these levels. Naturally, he should be willing to ride out some volatility for portfolio growth over the next decade.