Meta Platforms Stock: useless investments? – Financial trends

Bad analyst: Investing in metaplatforms is pointless if the metaverse won’t pay off until 2030.

In one look :

  • Low ad revenue.
  • Over $20 billion in losses.
  • META shares are down 0.03% at $117.09.

Needham Analyst Laura Martin reiterates underperforming rating on shares of Metaplatforms inc. (NASDAQ: META). The analyst fears that the company’s free cash flow (FCF) and EPS underdelivery are tied to higher spending in the metaverse.

Low ad revenue

Martin also said weak advertising revenue due to the slowing economy and the popularity of TikTok may also have contributed to the slow performance.

The analyst questioned whether META has a core business when a competitor (like TikTok) hires key content creators who combine newer demos and millions of watch hours and ad units.

The company talks about returns on its Metaverse investments in terms of 2030, well beyond the time frame of most investors. The analyst opined that there is no reason to invest in META today if the spending will only pay off in 2030.

Are the investments useless?

Even if the world changes before 2030, today’s investments may never pay off, the analyst added. It’s possible that the huge expense that went into creating the Metaverse indicates that the company fears existential risks to its historical collection of companies.

Apple’s elimination of IDFA destroyed META’s best feedback loops on iOS devices, and today Retail Media Networks (RMNs) have better closed-loop attribution that undermines META’s pricing power, said the analyst.

Investors should stay away while weighing several long-term valuation risks to META’s story, including competition, changing consumer behavior and META’s difficulty in controlling its content or distribution.

More than 20 billion dollars in losses

Martin estimates that Metaverse investments, called Reality Labs at Meta’s P&L, will lose more than $20 billion in 2022 from $10 billion in 2021. The analyst cut estimated revenue for FY23 to $118.9 billion. dollars, OIBDA at $47.6 billion and adjusted EPS at $7.57. .

course development: META shares are down 0.03% at $117.09 when last checked on Friday.

Should meta-platform investors sell immediately? Or is it worth starting?

How will meta-platforms evolve now? Is an entry worth it or should investors sell instead? Find out the answers to these questions and why you need to act now in the latest analysis of meta platforms.

Leave a Comment