What Is Facebook Trading At Right Now

Facebook Stock: Is It a Expert Purchase Right Now?

Meta Platforms, the parent company of Facebook (Nasdaq: FB), released its quaternary-quarter and total-year earnings for fiscal year 2021 on Feb. two. The tech giant’s weak quarterly results and outset-always decline in active daily users sent the stock tumbling over 26%. Information technology was the S&P 500’s largest-ever i-twenty-four hours reject, and it stripped the company of over $230 billion worth of market value, The New York Times reported. Does that mean you should blitz out to buy the stock in the dip, concord off to see what happens side by side — or forget it entirely? Here’s what you need to know.

Facebook past the Numbers

Sales in the fourth quarter were $33.67 billion, 20% higher than sales in the same quarter last twelvemonth and outpacing analysts’ expectations of $33.4 billion, CNBC reported. However, that wasn’t enough to generate a profit in low-cal of the social media giant’southward 38% increment in total costs and expenses — some of which can be attributed to an outsized investment in its metaverse initiative — compared to the same quarter last year. Facebook finished the quarter with net income downwardly eight% year over twelvemonth.

Earnings were $3.67 per share, which fell short of the $3.84 per share analysts expected.

The average number of active daily users cruel by near one-half a 1000000 users, according to The Washington Post.

The almanac numbers paint a rosier picture:

• Total revenue: $117.93 billion, up 37% from 2020
• Profits: $39.37 billion, up 35% from 2020
• Facebook active daily users: $ane.93 billion, upwardly five% from 2020
• Advertising acquirement: $114.93 billion, up over 35% from 2020

A Acquirement Beat Doesn’t Always Betoken an Increment in the Stock Price

Although quarterly earnings per share were slightly lower than analysts had predicted, revenue was substantially higher and the almanac results were positive overall. Nevertheless the stock price tanked.

Why?

The respond to this question may be easier than it seems. While investors don’t have a crystal ball, they even so base their trading decisions on what is likely to happen in the future, not what has happened in the by. And the future looks a little murky for Facebook.

The visitor had warned that advertising growth could exist sluggish in the fourth quarter. Changes to Apple’s iOS operating arrangement have made it harder for Facebook and other social media companies to target their ads to consumers, who can now opt out of having advertisers follow their every motion online in society to serve upward ads related to searches they’ve performed and sites they’ve visited.

At that place’due south too the uncertainty of Washington’southward concern over the misinformation that spreads unchecked on Facebook and other social media platforms. In March, Marker Zuckerberg was chosen to testify earlier Congress, along with some of his boyfriend tech CEOs, about what the platform is doing to ensure that erroneous information virtually COVID-19 and other topics isn’t shared as though information technology were fact. And in October 2021, Congress heard testimony from a whistleblower who leaked a trove of visitor documents
to The Wall Street Journal. Included in the documents were research reports and employee discussions suggesting the company knew it was promoting harmful content on its social media platforms, including Facebook and Instagram, the Journal reported, merely ignored the danger to protect profits — an allegation Zuckerberg denies. Facebook noted during the Q3 earnings call that it was nether investigation by the government.

Facebook faces new legal troubles heading into 2022 that began just weeks into the first quarter of its 2022 fiscal year. The Federal Trade Commission has filed a lawsuit against Facebook alleging the platform has a monopoly in social media and has abused its ability by engaging in a “buy-or-bury” strategy that harmed its contest, The New York Times reported. A federal judge greenlighted the suit on Jan. 11

In its 2021 almanac study, Facebook reiterated risks it faces related to authorities regulation and enforcement too as other litigation, including class action suits. It also noted that unfavorable media coverage could bear on its ability to maintain and enhance its brand.

Contest from other platforms has driven Meta to beefiness up its own social offerings with the introduction of Instagram Reels. Reels get prime space on users’ Instagram feeds and are the app’s primary driver of engagement, The New York Times reported. Whether information technology can take market share from TikTok remains to exist seen.

The market place doesn’t like incertitude, and there is a fair amount of dubiousness right now effectually whether Facebook tin overcome these challenges.

Is Facebook Stock a Good Buy Now?

No investor tin predict the future, and historical data only says then much. Determining whether or not Facebook — or whatsoever stock, for that matter — is a skillful buy depends on a number of factors.

What the Analysts Say

Of 44 analysts covering Facebook in February, 17 charge per unit the stock a “strong purchase” and 24 charge per unit it a “buy,” according to Yahoo Finance. That’s down from Jan 2021, when 18 rated it a “strong buy” and thirty rated it a “buy,” but analysts encounter Facebook’s electric current troubles as temporary. Their boilerplate cost target is $353.91 — over 49% in a higher place the current price.

CNBC’s Jim Cramer agrees that Facebook volition bounce back, albeit perhaps not before a farther decline. He told CNBC that investors can look a menstruum of chaotic selling, merely after that, “I predict Meta-Facebook volition exist a buy.” That said, Cramer did concur that the quarterly results were disappointing. For those who might exist because selling, he said, “You can justify selling the stock, perchance down as much as xv%,” simply he called a 26% decline “overdone” considering “Facebook has actual earnings.”

What the Fundamentals Testify

In that location are a number of metrics that investors utilize when they research stocks to determine the health of a company relative to others in its sector and to the market every bit a whole. One of these is the price-to-earnings ratio. The P/E ratio compares a stock’s toll to the earnings per share the visitor generates. The ratio tells investors how much they’re paying for each dollar of earnings. So, if a stock is trading at $25 per share and earnings per share are $one, that stock has a P/E ratio of 25.

The P/Eastward ratio is useful when comparison stocks to one another, to the sector they’re in, or to the market as a whole. As of February. 5, Facebook’s P/E ratio was 17.22. The estimated P/E ratio for the tech sector for 2022 is 30.22, according to Allegiance. And the P/E ratio for the S&P 500 at the outset of February was 25.37.

Of these 3 ratios — that of Facebook, the tech sector and the S&P 500 — Facebook’s is the everyman. A lower P/Due east ratio is amend since information technology ways you are paying less for a dollar of earnings. So, since Facebook’s P/E ratio is lower than that of the Southward&P 500 and the engineering science sector, fundamental analysis says that the stock is a relatively skilful value.

How To Know If Facebook Stock Is Right for You

There’s another consideration that is ofttimes disregarded when deciding whether or not to purchase a specific stock, and that is how it fits into your portfolio.

A expert stock portfolio contains a good mix of stocks — small caps, large caps, growth stocks, value stocks, foreign stocks, domestic stocks, and stocks from many different industries. Diversification is important, even if you don’t have a large portfolio.

Advice

Earlier you decide to buy a stock like Facebook, you want to brand sure your portfolio isn’t likewise heavily concentrated in applied science stocks. This sector has had a good run recently, so it may represent a larger pct of your portfolio than y’all think. That’s not necessarily a bad thing, but you may want to sell some of your other tech holdings if you decide to buy Facebook.

For some investors, another criterion they consider is the company’due south mission, vision and culture. You may want to think about whether y’all consider the company to be a good corporate citizen and a fair employer before y’all choose to invest.

Daria Uhlig contributed to the reporting for this article.

Information is accurate as of Feb. 5, 2022, and bailiwick to alter.