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Meta is not having a good year so far. To prove it, they are currently down around 44% since the beginning of 2022. While it is true that most stocks have not had a good 2022 so far, Meta is definitely suffering more than most, and there are a few reasons for this. First, Meta crashed around 26% in one day after their last earnings report. While they definitely did underperform expectations, I thought the stock price drop was significantly overdone. I wrote an article on this part already, but I do want to make some key points in this one as well. First, Meta missing their expected earnings made sense. Apple had recently changed how Facebook could use Iphone users data, and it was already known that this would decrease ad spend. I think that this was already priced in to the stock, and I also think that this is a temporary problem for Meta as they explore other options. A 26% drop for a problem that was already priced in is irrational. Second, Meta missing growth in users probably came from Meta focusing on their other businesses like, for instance, Oculus. I think that Meta still has an insane amount of growth possibilities and will continue to grow, but also, they already have 2.9 billion people using their services so that alone gives Meta a lot of people to monetize through.
Meta also went down 6% today, and the reason is insane to me. Netflix recently crashed 38% in a day after a terrible earnings report, and somehow, that also made Meta stock fall. I don't see how this makes any sense at all because Netflix's struggle for growth has nothing to do with Meta at all. The only way I can see how this makes any sense at all is if people think that Netflix's growth problem came from not doing business with Russia anymore and people think that this will show up in Meta's earnings call next week as well.
Meta is currently worth around 510 billion dollars. This seems insane to me as they have 2.9 billion people to monetize through on their services right now and that number does seem to be growing. I struggle to see how that valuation makes any sense at all considering their actual numbers. Meta has a p/e ratio of around 13 right now which is absolutely baffling. Compare Meta's p/e ratio to any other tech company experiencing the growth levels that Meta is experiencing, and one will see why this is so crazy. I believe that this is one of the most undervalued companies in the world right now.
If I sound bitter, it is because I am. I bought Meta stock after the first crash as I saw that the crash was from a completely irrational take on their earnings report. Even though I believe that all evidence points to me being right, it still has been a very costly decision in the short term as Meta has decreased in value quite a bit sense then. I do believe that this will be an insanely good long-term investment for me, as I personally believe that Meta should be worth a trillion dollars which is almost double what it is at right now.
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