Meta Platforms, Inc.

FB Details

Meta Platforms, Inc. (NASDAQ: FB), formerly Facebook Inc., is a technology company that focuses on developing technologies that allow people to engage and share via mobile devices, personal computers, virtual reality headsets, and in-home devices. 1) Facebook Family of Apps (FoA), which includes Facebook, Instagram, Messenger, WhatsApp, and other services, and 2) Facebook Reality Labs (FRL), which includes consumer hardware, software, and content for augmented and virtual reality.

Latest News:

• Share Repurchases: In FY21, FB repurchased 136 million common shares for a total of USD 44.81 billion. At the end of December 31, 2021, the company still had USD 38.79 billion available under its repurchase authorization.

FY21 Results:

• Rise in Topline: Revenue increased 37.18% to USD 117.93 billion in FY21 (ended December 31, 2021) from USD 85.97 billion in FY20, reflecting a revenue gain across all segments.
• Expansion in Bottom-line: FB's net income climbed to USD 39.37 billion in FY21 from USD 29.15 billion in the previous year.
• Strong Balance Sheet: As of December 31, 2021, the company had cash and cash equivalents (including short-term investments) of USD 48.0 billion and outstanding debt (lease liabilities) of USD 581 million.

Key Risk:

• Regulatory Risk: FB's operations are governed by a tangle of regulations governing privacy, data use and protection, content, competition, safety and consumer security, and other related areas, all of which are difficult to interpret. The company's reputation, revenues, and earnings could be harmed if tighter rules are issued or if required laws are not followed.

Outlook:

• Q1FY22 Guidance: As of FY21, FB estimates USD 27–29 billion revenue in Q1FY22, indicating a 3–11% YoY increase.
• Capex Guidance: FB aims to spend USD 29–34 billion on capital expenditures, including principal payments on finance leases.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

FB's stock price has fallen 46.71% in the past six months and made a new 52 week low today. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 240.00.

Considering the significant correction in the stock price, market dominance in social media platforms, robust financial performance, encouraging outlook, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 194.35, down 2.05% as of February 24, 2022, at 10:04 AM ET.

Three-Year Technical Price Chart (as of February 24, 2022, at 10:04 AM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.