Meta Stock Forecast 2023, 2025, and 2027
Meta Stock Forecast 2023: The article discusses the factors in favor and in against Meta stock. Meta Stock Prediction for today and for the coming years has also been discussed.
Will Meta Stock Go Up? The latest cost-cutting strategy by Meta is helping the stock price rise.
Latest Meta Price [Facebook Stock Price]
Meta Latest News
- Meta Platforms is set to release its quarterly earnings report on October 25th after the market closes.
- The Competition Commission in South Africa is conducting an investigation to determine whether companies like Meta and Google engaged in unfair competition with news publishers by utilizing their content to generate advertising revenue.
Meta Stock Today Price Prediction
|1. Market's Wisdom||N/A|
|1a. Market Data||N/A|
|1b. Technical Recommendation||Neutral|
|2. Crowd's Wisdom||Partially Bullish|
|2a. Social Media Buzz||Steady|
|2b. Social Media Sentiment||Higher|
Meta Stock Forecast 2023
The average META Stock Forecast for the next 12 Months is $384.4
|Average META Stock Forecast for the next 12 Months||$384.4|
Meta Stock Price Prediction 2023 to 2027 (Aggregated)
- Meta Stock Price Prediction 2023 is $328
- Meta Stock Price Prediction 2024 is $358
- Meta Stock Price Prediction 2025 is $407
- Meta Stock Price Prediction 2026 is $446
- Meta Stock Price Prediction 2027 is $480
Meta Stock Forecast 2023: Highlights of Second Quarter, 2023
- Revenue – Meta Platforms Inc. reported strong revenue growth in the second quarter of 2023, reaching $32.0 billion. This represents an 11% increase compared to the same period last year. Even on a constant currency basis, the company’s revenue still grew by 12% year-over-year.
- Costs and expenses – Meta Platforms Inc. reported total costs and expenses of $22.61 billion, representing a 10% increase compared to the same period in the previous year. This increase includes significant accrued legal expenses of $1.87 billion and restructuring charges of $780 million.
- Meta’s capital expenditures for the second quarter of 2023, including principal payments on finance leases, totaled $6.35 billion.
- Meta Platforms’ user metrics are showing positive growth.
- The average Family Daily Active People reached 3.07 billion, marking a significant 7% year-over-year growth.
- The Family Monthly Active People reached an 3.88 billion as of June 30, 2023, showcasing 6% year-over-year growth.
- The Facebook Daily Active Users reached 2.06 billion on average for June 2023, demonstrating a 5% year-over-year increase.
- The Facebook Monthly Active Users grew to 3.03 billion as of June 30, 2023, with a 3% year-over-year increase.
- During the second quarter of 2023, Meta Platforms Inc. bought back $793 million worth of its Class A common stock through share repurchases. As of June 30, 2023, the company had an amount of $40.91 billion available and authorized specifically for future repurchases of its own stock.
Facebook Stock Forecast: Should you buy or avoid Meta?
Meta did not have a good 2022 as the overall profit of Meta was reduced to half. Meta in the fourth quarter reported nearly 3 billion active users across all its social media platforms, Facebook, Instagram, and WhatsApp. This was the highest for the social media ain’t. However, the overall revenue for Q4 dropped 4% and earnings saw around a 52% YOY decline.
One of the main reasons for Meta’s revenue plunge was been the failure of its Reality Lab. Reality Labs is burning cash at a record pace. The declining ad revenue and the failure of Meta’s much anticipated Metaverse platform are hurting the company. Additionally, Meta might be witnessing a saturation in the daily active users. It is also losing its space to platforms like Tiktok.
Overall, Meta is not one of the good FAANG stocks to be preferred in the bullish market.
Meta Stock Forecast 2023: Bull Case
Meta’s ever-growing Monthly Active Users (MAU) – The strong point of Meta is its huge domain base. Nearly 3.65 billion people are using at least one of the apps by Meta and it grew at 4% YoY in the second quarter of 2022. The growth in active users is astonishing given that it has already reached almost half of the world’s population. It signifies that it will remain the default advertising platform for most companies.
Apple iOS thwarted its advertising growth, but Meta is overcoming those challenges by rolling first-party data and more focus on video-based ads. It is believed that once Meta establishes those changes, and macroeconomic headwinds subside, it’s only a matter of time before Meta’s ad business will stabilize and starts to grow again.
Meta is the cheapest FAANG stock- Bulls believe that Meta is a handsome pick as it is trading at just 11 times forward earnings. That makes it one of the cheapest FAANG stocks by a wide margin. The company is also taking steps to cut down costs by deciding to lay off 13% of its staff or 11,000 employees. That shows that Mark Zuckerberg is taking some tough calls to cut down costs.
CEO has scaled back budgets, reducing perks and shrinking real estate footprints. The company is also working to monetize Instagram reels to compete with TikTok. People also believe that it is a matter of time before TikTok will be banned and that will be a big plus for Meta.
Meta Stock Performance
- Last 7 Days: +0.3%
- Last 1 Month: +4.0%
- Last 6 Months: +51.8%
- Last 12 Months: +148.7%
Facebook Stock Forecast: Will Meta Stock Recover?
- Underperformance by advertising business- Now, it is known that the advertising industry is facing the heat due to rising interest rates and advertisers are spending less due to the possibility of a recession in the coming months. Meta Platform is affected by the same. However it is important to understand the depth of impact to gauge the future.
The advertising business generates almost 98% of the total revenue for the Meta platform in any quarter and hence any negative impact on this segment will have a huge impact on the company. For reference, Alphabet Inc generates only 79% of its revenue from advertising, and Apple Inc. generates almost negligible. The same difference is seen in their share price journey. Meta Platform is way more dependent on the advertising business.
But there are other issues also with Meta Platform. Apple’s iOS update has enabled users to opt out of data tracking features and without the data tracking Meta’s ad has become loss less effective in revenue-generating clicks. Also, it is facing stiff resistance from Byte Dance’s TikTok which has become the go-to app for US teens. Meta has invested in Instagram reels to counter the same, but it is very hard to monetize the same as compared to regular ads.
As a result, Meta’s revenue dropped 4% YoY in the third quarter of 2022 to $27.7 billion. It was also the second consecutive quarter of revenue drop. Its net income was even worse, which plunged 52% to $4.4 billion, missing the consensus forecast by $0.22. It is still expected that advertising business headwinds will continue in the first half of 2023 and hence not a positive sign for Meta’s investors.
- Loss-making Reality Labs business – Metaverse is CEO Mark Zuckerberg’s ambitious project. The rebranding to Meta Platform was also to show the change in pivot to the future technology of virtual and augmented reality (VR and AR). But at present, the business of Reality Labs, which constitutes the AR and VR business is having a difficult time.
Reality Labs generated only $1.43 billion in revenue, a rise of 3% YoY in the first nine months of 2022 in contrast to its loss widening to $9.44 billion from $6.89 billion. In the conference call of Q3, Meta’s CFO Dave Wehner warned that its Reality Labs business losses would increase in 2023 as it plans to launch its next Quest headset. With this, total expenses for the company would also rise to $101 billion from $85 billion.
So, the Reality Labs business is a complete disaster for Meta right now. While it generates only 1% of the total revenue but has lost $26.3 billion in the last 33 months while generating a revenue of $4.9 billion. If we remove Reality Labs from Meta’s Q3 numbers, its operating margin would jump from 20% to 34%.
Meta Horizon’s World Platform which connects its VR users is also expected to have peaked in early 2022. In the first half of 2022, it had 300,000 active users, but now it serves only 200,000. Going into 2023, there is a strong proposal that Meta should either downsize or eliminate Reality Labs to turn things around.
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.
Meta Platforms Stock Forecast: Key Ratios
- P/E ratio – 37.62
A higher P/E ratio indicates that investors have higher expectations for future growth.
- Price to Cashflow – 15.18
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 in a good position compared to its past.
- Price to book ratio – 6.19
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.
- EV/EBITDA – 17.08
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 19.04.
- Return on Capital Employed – 14.52%
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 Oculus 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.
Meta Stock Forecast: Is Meta a Buy, Sell or Hold?
- 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 with a $100B market capitalization is the one that 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 to the Metaverse.
- Meta is currently a Hold
Meta Stock Forecast: Conclusions
Also, Meta is overdependent on the advertising segment with Metaverse proving to be a disaster for rest 2%. Meta is spending way too much at present on Reality Labs, while it may prove to be a key turner five to seven years down the line, for 2023, it will remain to be a major headache for the company.
Although it is anticipated that more pressure will be there on Meta Platform 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.
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.