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Meta Platforms, Inc. (META) stock has underperformed the S&P 500, falling by over 50% compared to the S&P 500’s loss of around 12% over the past year. Meta experienced a slowdown in performance, and hedge funds have been actively selling the stock. The shares had a rank of twelve on the WhaleWisdom Heatmap for the first quarter of 2022.

Meta Platforms is a technology conglomerate that develops products for people to connect and share worldwide. The company was formerly known as Facebook, Inc. and Meta Platforms now operates a family of applications and its Facebook Reality labs. Meta Platforms’ products and services include Facebook, WhatsApp, Instagram, Giphy, and Oculus, among others. The latest stock market correction during a time of high inflation and interest rate hikes has negatively affected Meta Platforms, as it has other technology companies. Through the volatility, Meta Platforms has drawn revenue from its successful digital advertising business and continues to develop the Metaverse, promoted as the future of the internet.

Institutions and Hedge Funds Were Selling

Institutions overall were selling the stock, with the number of aggregate 13F shares decreasing by about 6.9% as of March 31, 2022. Hedge funds trimmed portfolios in the first quarter, reducing claims by roughly 7.8%. Reviewing hedge fund activity, 63 created new positions, 265 added, 110 exited, and 252 decreased their stake. Meta Platforms’ 13F metrics show that the number of hedge funds and institutions has held steady over the past decade. However, Meta’s stock value has faced more volatility over the past two years.

(WhaleWisdom)

Positive Earnings Estimates

Analysts expect to see earnings increase in 2022 and 2023, bringing earnings per share to $13.54 by December 2023, up from an estimated $11.54 for December 2022. Revenue estimates are also encouraging, with an anticipated rise by the end of 2022 to approximately $125 billion and continue to rise to an estimated $143.8 billion by December 2023.

(WhaleWisdom)

Analysts Lower Price Targets

Many analysts lowered price targets after first-quarter earnings were announced. Ronald Josey of Citi kept a Buy rating on shares while reducing the firm’s price target on the company to $270 from $300 amidst increased macroeconomic headwinds. Analyst John Blackledge of Cowen Inc. lowered his firm’s price target to $275 from $300 due to estimates of slowing advertising spending and kept an Outperform rating on the stock. Analyst Laura Martin of Needham & Co. downgraded Meta Platforms to Underperform from Hold, noting the impact of consumer behavior shifts, competitions, regulatory risks, and the company’s investment in the Metaverse as contributing factors.

Favorable Long-term Outlook

Meta Platforms has a history of growth, despite the recent downturn. While hedge funds were selling in this volatile market, analysts recognize that advertising is a continued source of revenue as the company also builds the metaverse. Analysts’ earnings estimates make this stock more attractive, as it will likely rebound and reward patient investors.

This entry was posted on Monday, July 18th, 2022 at 9:57 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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