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Meta had a really rough 2022. The market itself experienced a pretty large downturn, and Meta was hit especially hard. This happened mostly due to two not so great quarters for Meta. While I was not surprised to see the stock fall from these reports, I was very surprised to see how much they fell. Meta started trading at valuations so bizarre that I could not believe the opportunities that I was given to buy shares of this company.
At one point I wrote that Meta was trading at a p/e ratio of a tobacco stock. That was when I thought the valuation Meta was trading at was an amazing opportunity to buy shares of the company. While the company was having problems with earnings, I saw that Meta was still growing its platforms like Facebook, Instagram, and WhatsApp. Their earnings were hit from Apple's privacy change, but I believe this will be temporary, and Meta's latest earnings report did show that people advertising on their platforms were getting a better return than previously. I've seen many people claim that they believe that ad spend will be decreasing, but considering the fact that advertising on Meta's platforms has the best return over any other ad platform that I know of, I believe they would be the last platforms advertisers would pull money from. Since they are still increasing users, that gives them even more people to show ads to.
Another comment that I kept seeing while Meta stock was crashing last year, was that the company was going to fail because the metaverse will fail. This take was one that always baffled me, and I have concluded that the people saying this have just never actually looked into this. It's almost like people forgot that behind the metaverse, there is still a core business. Even if the metaverse does completely fail, Meta as a company will be fine. Their key business is still growing. It seemed like everyone took this huge, highly profitable company and decided to only value it based off of a side project they have. Meta has a ton of cash, and while it might look like they spent a ton of cash on the metaverse, they have a ton more. I'm completely fine with Meta spending part of its excess cash on metaverse technology. If the metaverse fails, there's still a large company there that I'm happy to own. If it succeeds, then I'm happy that I'm a shareholder. What I find crazy is how many people last year would say that they are bearish on Meta, and when asked why, they would say because they don't believe in the metaverse.
While the stock is doing well so far this year, It's still not valued at what I believe it should be. The company is currently valued at $477.65 billion. I believe that 2023 could be a very profitable year for them.
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