It\u2019s hard to believe that Facebook has a parent company.<\/p>\n
But there you have it.<\/p>\n
Harder even to believe (CEO Mark Zuckerberg) Zuck\u2019s Mommy Meta Platforms Inc (Meta) <\/strong>turned out to be a pretty good idea, well handled.<\/p>\n Meta was the second-best performing stock of the entire S&P500 index in 2023, lagging only behind Nvidia (NVDA).<\/p>\n If US tech stocks were expected to underperform this year \u2013 having splurged without remorse from their late 2022 lows \u2013 well,\u00a0 there have been no signs of an impending comeuppance just yet.<\/p>\n But it\u2019s a big week on Wall Street<\/a> and these coming few days will be a major test of whether the Magnificent 7 can justify their Mega Tech titles.<\/p>\n \u00a0<\/p>\n Via Google<\/em><\/p>\n \u00a0<\/p>\n Stockhead<\/em> asked XM\u2019s CEO Peter McGuire to unpack what makes Meta\u2019s tech tick; how the Dunce of \u201922 became the Duke of \u201923 and why he reckons 2024 could prove to be even better\u2026<\/p>\n \u00a0<\/p>\n Meta Platforms earnings\u00a0to be out on Thursday after closing bell<\/strong> \u00a0<\/p>\n From his Fortress of Sunytude in Coogee, Peter told Stockhead<\/em> over the weekend that Meta\u2019s outperformance last year has been the source of much analyst discussion \u2013 with Wall Street largely putting down the turnaround to \u201cpositive idiosyncratic and macroeconomic developments.\u201d<\/p>\n\n Basically that means The Zuck surprised all by apparently listening to the flood of criticism which flowed his way after pursuing his ill-defined Meta dream, which became a cash-sucking nightmare.<\/p>\n \u201cMeta slashed thousands of jobs in 2023 to improve its operational efficiency and reduce costs, which seems to have not impacted its growth capacity. More importantly though, management\u2019s decision to stop throwing huge amounts of cash into the Metaverse project has been the key turning point.\u201d<\/p>\n Instead, Pete says, Meta focused on how artificial intelligence (AI) could improve its core business through user engagement and monetisation.<\/p>\n \u201cWithout directly selling AI products or services, but through the use of such tools, Meta managed to ride the AI wave and capitalise on what has been the main theme in stock markets.<\/p>\n \u201cBesides that, Meta largely benefited from the rebound in advertising activity as recession fears melted away and the base case scenario for the US economy shifted to a soft-landing.<\/p>\n \u00a0<\/p>\n Meta has taken the necessary steps to improve its operational efficiency and increase user engagement in its platforms via the use of AI tools, according to UBS.<\/p>\n Pete says this alone has led to a significant resurgence in its advertising business, whose revenue is anticipated to have grown by 21% in Q4.<\/p>\n \u201cOf course, with 2024 being a year packed with elections and major sports events such as the Olympics and European Football Championship, it seems that Meta has the necessary setup to take full advantage of the upcoming wave of ad spending.\u201d<\/p>\n However, there are also some risks on the horizon.<\/p>\n \u201cMeta is in a constant battle with TikTok and Snapchat for the social media platform crown, forcing the firm to continuously invest in new features to stay on top of competition.<\/p>\n \u201cMeanwhile, its strategic shift towards advertising has proved beneficial so far, but its concentrated business is exposed in the case of a severe downturn in the economy,\u201d he adds.<\/p>\n \u00a0<\/p>\n Meta\u2019s restructuring has significantly bolstered its profit margins without jeopardizing growth and that\u2019s expected to show up in the Q4 financials. For the last quarter of 2023, forecasts by Refinitiv analysts suggest that revenue is projected at $39.13 billion, which would represent a 21.67% increase on an annual basis. Meanwhile, earnings per share (EPS) are expected to grow by a staggering 181% relative to the same quarter last year, jumping from $1.67 to $4.95.\u201d \u201cDespite the relentless rally in equity markets and particularly in tech stocks, it could be argued that Meta\u2019s shares remain in an attractive territory, considering analysts\u2019 growth estimates,\u201d Peter told Stockhead.<\/p>\n \u201cThe 12-month forward price-to-earnings ratio, which denotes the dollar amount someone would need to invest to receive back one dollar in annual earnings, currently stands at 22.2x.\u201d<\/p>\n This ratio is way, way lower than the\u00a0 tech-heavy Nasdaq\u2019s average multiple of 26.5x.<\/p>\n \u00a0<\/p>\n\n \u00a0<\/p>\n Pete says Meta\u2019s consecutive record highs ahead of earnings this week aren\u2019t going to bother too many enthusiasts.<\/p>\n \u201cGven that Meta\u2019s stock is already trading at record highs and its multiples are pretty reasonable, it could be argued that there is still significant upside potential. In any case, even if Meta fails to deliver the anticipated performance, its valuation does not leave much room to the downside.<\/p>\n \u201cMeta\u2019s staged a full-scale recovery since its 2022 bottom of $87.20, jumping to consecutive higher highs in the past few sessions.\u201d<\/p>\n Meta: Weekly technicals<\/strong><\/em><\/p>\n Via XM.com<\/em><\/p>\n \u201cShould earnings surprise to the upside, the stock might extend its series of higher highs and claim the $400 psychological mark. Even higher, further advance could cease at $454, which is the 123.6% Fibonacci projection of the $384-$87.50 downleg.<\/p>\n \u201cAlternatively, if earnings reflect some weakness, the price could reverse towards the 2021 peak of $384. A break below that region might pave the way for the 78.6% Fibo of $320.\u201d<\/p>\n <\/span><\/p>\n The post McGuire on Meta: Better than any other Mega?<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"MSFT vs NVDA 1 year<\/h2>\n
Peter McGuire: Meta Q4 Earnings<\/strong><\/h2>\n
\nBoth\u00a0earnings\u00a0and revenue expected to skyrocket<\/strong>
\nStock trades at cheap multiples despite consecutive record highs<\/strong><\/p>\nMeta: What\u2019s next?<\/h2>\n
It\u2019s the little things: Meta\u2019s \u201cdrastically improved findamentals\u201d<\/h2>\n
\n\u00a0<\/p>\nMcGuire: Meta\u2019s cheap \u2018relative to the rest of the tech clan\u2019<\/h2>\n
Technically speaking: Could Q4 earnings add more fuel to the rally?<\/h2>\n