Meta Stock Forecast 2023: Metaverse or Madness?

Meta Stock Forecast 2023: Metaverse or Madness?

Meta Stock Forecast 2023: Meta Stock Forecast for the next 12 months is $145


Latest Meta Price [Facebook Stock Price]

The difficult macroeconomic environment that Meta is experiencing is having a negative effect on its advertising budget. Growth was hindered in the reported quarter by unfavorable foreign exchange rates, targeting and measurement challenges brought on by Apple’s iOS upgrades, the return to normalcy of e-commerce after the pandemic peak, and greater inflation. The reporting quarter saw a decrease in the user base in Europe. Macroeconomic and foreign exchange worries are reflected in Meta’s fourth-quarter guidance. A barrier is a weak demand for advertising. Reels will monetize far more slowly than feeds or stories, according to Meta. The metaverse investments of the firms are far away from being profitable and this has sent the stock down the red list of investors in recent times.

Meta Stock Forecast: Factors to look out for in 2023

  • Madness of Metaverse

Operating losses for Reality Labs in the 9 months ending 2022 are $9,438 million. The overall operating losses in this region from January 2020 to the present total an enormous $26,254 million when the losses from 2021 and 2020 are added together ($10,193 million from 2021 and $6,623 million from 2020). Investors would feel better about these massive metaverse bets if they were to receive a little dividend from the company.

  • Problem with Reels

Investors are concerned that since the Reels section is currently less profitable than Feed or Stories, less money will be made from advertising while metaverse investments are still high. As of the third quarter of 2022, Reels’ revenue run rate—which combines Facebook Blue and Instagram—was $3 billion. While TikTok is more similar to YouTube, where brand advertising is effective, the audience on Instagram is older and has more discretionary cash, making them more appealing to direct response advertisers.

  • Job Cuts in Meta 

In addition to a hiring freeze, Meta declared a reduction in discretionary spending that resulted in a 13% personnel reduction, or approximately 11,000 layoffs. Investors may now believe that operations and strategies are being appropriately reevaluated even though these changes do not alter the Q4 revenue expectation, which is in line with consensus estimates of about $31B. Following the news, Meta stock increased by 5% on that particular day. This move was just made to stop any further declines in the stock for some time.

  • Buybacks

The cash flow statement displays $41.2 billion in trailing twelve-month (“TTM”) buybacks. However, as the share price has dropped since then, this doesn’t provide investors with much of a return. Many claims that rather than lowering the share count, these buybacks are primarily about compensating SBC dilution.

Meta Stock Forecast: Price Prediction for the next 12 months

Average META Stock Forecast for the next 12 Months$145
Oppenheimer$145
Canaccord Genuity Group$170
HSBC$110
Cowen$135
The Goldman Sachs Group$165

Meta Stock Forecast: Q3 Results

  • The total revenue of the company stands at $27.1B with a YoY of -4.47%. This has been the case since the last two quarters for Meta where the revenue has struggled to increase and on the contrary has taken hits.
  • The Earnings per Share stood at 1.64 with a YoY of -49.84%. The YoY rate of EPS has been falling for Meta for the last three quarters with revenues for this quarter at record lows since 2021.
  • The Free Cash flows for the company stand at $317M with a YoY of -96.06%. The more disturbing fact for the company in this quarter was the cash flow from investing activities which was at -$9.70B with a YoY of -2839.70%. This has been a major signal of how Meta’s investments are panning out in recent times.
  • The revenue segments show that the revenue from advertising from the Family of Apps was again covering most of Meta’s revenues with $27M and Reality Labs with $285M.

Meta Stock Price Prediction: Valuations

While Meta’s predicted earnings for FY 2023 are $8.08, the EPS trend is extremely downward, thus estimates may continue to decline. Shares of Meta are currently trading at a P/E ratio of 12.4x based on forecast EPS of $8.08, but there is a large risk to earnings due to the correction in the advertising industry and aggressive metaverse expenditures made by Meta Platforms. 

These factors can lead to the share price of Meta still declining. One would be willing to pay an 8-9 X P/E ratio for Meta, which equates to a price range of $66-72, to correctly reflect those risks. This price range is almost 35% less than the current share price for Meta Platforms. It is at this level where Meta will be seriously undervalued and the risk of any further fall in the advertising market will be fully discounted into the shares of the Meta platform.

Read about Google Stock Forecast

Meta Platforms Stock Forecast: Key Ratios

  • P/E ratio –  12.93

The company is very close to being undervalued right now as the lowest P/E of Meta was around 9 and the stock is also very bearish in the short term which means investors can look to buy at the right price very soon.

  • Price to Cashflow – 6.74

It compares a company’s market value to its operating cash flow and the lower it is, the more undervalued a stock is. Looking at the historical ratio of Meta in Price to cash flow, we can say that right now it is very low as compared to where it was in 2021 (21.7).

  • Price to book ratio – 2.91

It is used to compare a firm’s market capitalization to its book value. P/B ratios under 1 are the ones that attract most of the value investors. There is also some gap between ROE (22.4%) and this ratio for Meta which is going in line with how they both are coming down along with the price.

  • EV/EBITDA – 7.66

This measure is used to determine the value of a company. The best use of this ratio happens when it is compared with the industry average. It values the company, debt included, to the company’s cash earnings less non-cash expenses. Here the IT sector has a ratio of 15 and Meta is at 7.66 which means it is close to being undervalued.

  • Return on Capital Employed – 19.57%

This percentage is used to check the company’s capital efficiency and profitability. It can simply be interpreted as a higher value means higher the company’s profitability. In this case, Meta’s ROCE has kept on decreasing since 2021 but has not taken that major a hit.

Meta Stock Forecast: Reality Labs and Metaverse

  • For Q3 2022, Reality Labs reported a net loss of $3.7B with a total of $9.4B loss for the nine months ended 2022. According to the press release of Meta, this money has gone to the R&D and the development of Metaverse and Occulus Quest 2. The concerning fact is that Meta has spent an eye-watering $36B on the concept of Metaverse. The sales made by Reality Lab’s current quarter were around 285M which has been a major fall compared to the previous quarter where it made a sale of $452M. There has been a gradual decrease in customers after the pandemic when people came out of their homes.

The interesting thing to note here is what the people’s opinion is for the Metaverse and the tools through which they access it. Even though the VR sets provided by Meta have reached very fewer hands, it is the amazing reviews it gets that make us believe in the existence of Metaverse in the future times.Just to get some taste of how much do people like Oculus products, here are some of the reviews from verified buyers –

“You’ll find free games that are good for what they offer but paid games will blow your mind.”

“It’s so immersive. I was in outer space and I was able to push planets around; I was in a black hole for a moment. It was incredible. In another game I was in a real story about a man who has schizophrenia and in another, a fitness game takes you all over the world while you work out.”

“I am very impressed with the Meta Quest and have absolutely no regrets about the purchase. Exercise one, called Supernatural, is by far one of the best reasons to get this if you want to get in shape and live a healthier life. It’s supremely an exceptional fitness app that also includes stretching and meditation as well.”

This is just the tip of the iceberg of what people’s opinions are on Occulus products. Most of the reviews align with the very fact that people got addicted to this product and had the world experience.

This brings us to the conclusion that there is a place for Metaverse in the future. It has all capacities to revolutionize the gaming industry and also the way we live our lives. The only fact is that Meta should be the one capitalizing totally in this sector.

Meta Stock Forecast: Is Meta a Buy?

  • The Metaverse investments are yet to produce results for the company.
  • On the other hand, the monetization of reels will happen in early 2023.
  • Looking at Reality Labs revenues, Metaverse is yet to turn into a profitable business till 2023.
  • The gaming industry of $100B market capitalization is the one which Meta can easily get into.
  • Messenger and WhatsApp are the other extremely prized possessions. Meta is aggressively working on monetizing the opportunities presented by its subsidiaries.
  • On September 16, 2020, Meta unveiled Quest 2, its next-generation VR headset with a $299 price tag. The business also disclosed a multi-year collaboration with EssilorLuxottica, the parent firm of Ray-Ban. In 2021, the two businesses collaborated to develop a pair of smart glasses with the Ray-Ban brand. This will further help the company attract more consumers in the Metaverse.
  • It is all about how much belief one has in the future of Metaverse to be investing in this company standalone. As it looks like a gamble, I think the investors are also down for a bet in Meta.

Meta Stock Forecast: Conclusions

11 thousand employees, or around 13% of the staff of the social media firm, will be let go by Meta. Going forward, the decision may save the business an estimated $1.7B yearly, but cost-cutting measures by themselves won’t be enough to pique investors’ interest in the stock once more.

Although it is anticipated that more pressure will be there on Meta Platforms stock in the near future, the stock might become quite intriguing for investors around $66-72, when they will most likely receive a substantial discount on Meta’s profits outlook. The massive decline in free cash flow is largely concerning but it will be recovered in the future but that won’t save the stock from facing near-term significant obstacles.

Meta Stock Forecast: FB Stock Technical Analysis

Looking at the daily charts of Meta, we can see that it took a sharp fall in its latest Q3 results and made a quick recovery after having hit $88. This stock peaked around the end of 2021 and has been in a downtrend since then due to inflation and uncertain economies. In the coming days, $123 could act as a strong resistance for the stock. Since it’s a recent pullback, RSI levels on the daily timeframe have jumped to 50 which means that the stock is still bearish as a slight recovery has pulled the stock back from oversold regions. The downward trendline will be a good pickup signal for both sellers and buyers. Sellers can feel more confident shorting it on the upside resistance levels with a small stop loss whereas buyers will have to sync their market timings with the break of the trendline and some positive news for the stock. On the weekly time, the stock is still in the oversold region and has been there for a long time now so it is high time that Meta could show some significant pullback. Anything below $88 could bring on more selling to $72.

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Meta Stock Forecast Today

Overall OutlookNeutral
1. Market's WisdomNeutral
1a. Market DataNeutral
1b. Technical RecommendationNeutral
2. Crowd's WisdomNeutral
2a. Social Media BuzzNeutral
2b. Social Media SentimentNeutral

Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.

Mayank Kumar

Mayank Kumar

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