Meta, formerly Facebook has had its ups & downs in the last few years. The stock price too. It has been a highly-profile company that continues to capture the public’s interest since its initial public offer in May 2012.
Meta, one the largest US companies is widely held both by institutional investors and retail investors. It was also included as a Facebook company in the FAANG acronym along with Apple (AAPL), Netflix/NFLX, Alphabet(GOOG) and Alphabet(GOOG) unit Google. Although it enjoyed a steady and relatively easy rise for many years after its IPO, shareholder concerns around data privacy and investigations into antitrust violations have compelled the shares to drop. Meta shares made it to the top in August 2021. But they plummeted 25% on February 3rd 2022 as the company reported quarterly results.
2018-2022: Some Very Bad Years
There have been many problems with the social media giant and this culminated in 2018. Concerns over Facebook’s (now Meta’s), handling of user privacy, fake news, and the company’s implicit involvement in allowing the site to be used by criminals or terrorists have been present for many years.
Facebook received the worst backlash because it helped Cambridge Analytica, a British political consulting firm, to data-mine millions of user profile information and exploit them to target political ads. This was both during the U.S. presidential elections and during the U.K. referendum campaign.
Facebook issued lower guidance in July 2018 earnings for ad revenue. Partly because of the personal data scandal, shares plunged as much 22% intraday. This was the stock’s largest intraday fall until February 3, 20,22 when shares plunged to 27% at their lowest point. The 2018 plunge was the worst in U.S. Stock Market history. It cost $119 Billion. That is before the February 3rd 2022 slump which initially was estimated to have taken $230 billion.
META continued to struggle through 2022 and reached lows that were not seen since 2015. This was due to a larger drop in tech stocks and huge fines and regulatory rulings from EU regulators. The EU regulators claimed that META had broken the law by forcing users receive targeted ads and violating user privacy. META stock dropped more than 60% by 2022. This was its worst performance to date.
How to Analyze and Interpret Meta
Buyers who buy stock at its lowest point on bad days are likely aware of the decline and will be trying to get a bargain amid bearish sentiment. After careful analysis of company prospects, some buyers may arrive at this conclusion.
These guidelines will give beginning investors a better understanding of the risks and what to be aware of when investing in Meta and similar stocks. While it is scary to enter the stock market, even seasoned investors have been there.
Investors need to do due diligence before they buy any stock. Investors need to make sure that the stock and company are capable of performing well. You can do a variety of analyses to ensure due diligence.
- The fundamental analysis involves evaluating the intrinsic value and industry conditions of the stock. It also includes the financial management and finances of the company.
- Technical analysis is based on statistics that include volume and prices in the stock’s history. Technical analysis doesn’t focus on a company’s intrinsic worth. It instead focuses on patterns or trends in the stock’s future and present price movements.
Fundamentally, investors should investigate the company’s finances. These financials can be found within the company’s latest SEC filings. An investor relations page should be on the company’s site. Investopedia and other financial sites offer extremely valuable company-specific information.
Doing Due Diligence
The investor should examine the prospects and guidance for Meta stock and its ad revenues growth.
Also, take a look at the trends regarding profit margins, total income, and active users. (MAU). These numbers could be trending in the opposite direction.
After performing due diligence on the stock and feeling satisfied with the purchase, the investor should evaluate if the current market price is a suitable entry point.
Fundamental analysts calculate valuation metrics to determine the stock’s worthiness. This is when the entry price is the most attractive. Investors might want to wait until the price drops before purchasing the stock. Although the value-earnings ratio or P/E Ratio is a popular valuation metric there are many other options. Meta’s January 2023 P/E ratio was 12.4 The P/E ratio for Meta is not enough to tell an investor much. It is possible to use historical or industry P/E rates to help you determine the stock’s current value relative to its competitors.
One way to find out if the stock’s price is at a good entry level is to examine its historical stock charts trends. Technical Analy uses price, volume, and other data to determine trends in supply/demand. It also attempts to find favorable entry points using common trading patterns.
If You Decide It’s A Buy
Calculating the appropriate number of shares to purchase will come after the investor has determined that the stock is a great deal at its present price. With every stock transaction, online brokerages often feature a share computation calculator. If not, the computation may be:
Total Amount to Invest / Prices per Share = How Many Shares to Buy
Meta’s current share cost was approximately $130.00 per share on January 8, 2023. This price per share puts the company’s total market cap around $340 million.
Meta allows investors to buy if they have $10,000 in total and $130 per share.
$10,000 / $130 = 66.6 shares
What has the Meta stock price performed over the past several years?
META stock has risen rapidly since its IPO, in 2013. In the fall of 2021, the company’s stock price rose to an all-time high of $380 (split adjusted). 2018 was difficult. META stock, however, fell more than 60% to 2022. A new record was set here.
What factors are responsible for the fluctuation in META’s stock price fluctuations?
The price of META’s stock fluctuates owing to variables that are both company- and industry-specific. In 2022, META’s shares fell more than the tech-heavy NASDAQ 100 Index. There have been various concerns about Meta’s data privacy. The 2018 Cambridge Analytica hack resulted in a dramatic decline in stock price. EU regulators also issued a ruling in 2023, in which they fined Meta hundreds and millions of euros for violating privacy laws online. Meta has also been subject to antitrust investigations. These have raised investor concerns.
The conclusion
Facebook’s stock prices have experienced significant swings, along with many difficulties such regulatory inquiries or data privacy issues. Before purchasing stock, potential investors should examine the company and its market trends. There are many potential dangers, including dependence on ad income, government regulation, and the competition from social media platforms. Advertisers and users might also point out that the organization may be criticized for controversial content or privacy concerns. It may experience user growth saturation and struggle with user participation.
