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Thursday, September 28, 2023

Meta Platforms Inc. (META) Stock is A Good Trade Option?

Meta Platforms Inc. (NASDAQ: META) announced a year-on-year revenue drop for the first time since its inception as a public business. The announcement caused quotations to fall, despite Wall Street expecting a reduction in the company’s earnings. META was trading at $160.72 on July 28.

Meta Platforms’ sales declined nearly 1% year on year to $28.82 billion in the second quarter, falling short of Wall Street’s expectations. Furthermore, the corporation claimed an insufficient rise in the number of new accounts. According to the most recent data, Meta Platforms has around 3.65 billion users.

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Meta Platforms has suffered a variety of challenges in recent quarters, resulting in a decrease in numbers. First and foremost, there is increasing competition from TikTok. It should be noted that Meta Platforms attempted to create its own video service analog, but this was seen badly by many Facebook and Instagram opinion leaders and bloggers.

The change in targeting guidelines for Apple software users also had a negative impact on Meta Platforms. This is a sizable portion of the audience for whom the corporation can no longer operate under the existing standards.

Earnings fell in the second quarter as Meta Platforms continued to invest in new products such as Instagram Reels and Reality Labs (a division of virtual reality). Earnings per share fell from $3.61 in the second quarter of 2021 to $2.46 in the most recent quarter. At the same time, management anticipates sales to fall further in the upcoming quarter, to a range of $26-$28.5 billion.

Reality Labs’ VR division revenue increased 48 percent to $452 million, despite a $2.8 billion operating deficit. Reality Labs’ revenue is predicted to fall in the third quarter, indicating that the Quest VR headsets are not selling as well as anticipated.

In general, investors expected Meta Platforms’ performance to be slightly lower than last year, therefore the drop in quotes following the publication of the quarter’s results may be described as mild. Nonetheless, even after the share price has dropped, the social media behemoth maintains a strong price-to-earnings (P/E) ratio of merely 14.

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