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Is Facebook a Good Stock to Buy in 2022?
Is Facebook a good stock to buy in 2022? Its valuation is too high for my taste, but there are some reasons why it might be. First, I believe that the poor 2022 outlook has already been priced into the stock’s valuation. Second, the company’s catalysts are in place. In other words, it will probably keep growing for a long time. That’s not to say that the outlook for FB in 2022 is rosy, but it is certainly worth watching.
Meta Platforms Inc / Facebook
The Meta (FB) stock price for 2022 is expected to reach $272, with a possible further rise towards $360 by the end of the year. The stock is expected to rise even further if the company is able to overcome controversies and consider its potential profit potentials. To see also : How Do I Find Facebook Marketplace in My Area?. If the company runs into problems, the stock price will likely depreciate. However, this scenario doesn’t rule out a quick drop to $2.60.
The stock price of Facebook and Meta Platforms was down in November and February. The latter was a month after Meta Platforms revealed a small decline in DAU in the fourth quarter of 2021. This was the first decline in DAUs for Facebook in years, so the stock price fell 26% that day. It hasn’t recovered since then. But investors shouldn’t rule out investing in Facebook just yet.
Meta’s future ROEs are in the mid-20s percentage level
In the coming years, AR and VR headsets will be able to deliver photorealistic images in the virtual world, which has drawn the attention of both consumers and technology companies alike. Meta is betting on this opportunity by pumping out powerful AR and VR headsets that fool users into thinking they are experiencing photorealistic scenes. To see also : How to Get to Marketplace 2022 on Facebook. Although it will take years to produce a compact headset that can provide photorealistic images, it has already started the process.
FB’s forward P/E multiple in the high-teens seems too low
FB’s forward P/E multiple of 20 seems low given the company’s dominance in the market. But Facebook’s growth runway is strong and the stock is expected to grow at a rate of 18% this year. To see also : Is Facebook Live in Real Time?. Facebook’s EPS is expected to double to $35 per share by 2028, and revenues should top $350 billion by 2030. As the world’s largest social network, Facebook is expected to grow its revenue by almost four times in this decade.
A higher multiple implies a stronger business outlook and lower volatility. Netflix’s forward P/E ratio is only slightly higher than FB’s, which suggests that the stock is due for a big rally. Its full stochastic is now bullish, implying a change in momentum. If that trend continues, higher Facebook prices are likely to come. In the meantime, Netflix’s stock price is below expectations.
FB’s valuations are undervalued
According to one valuation metric, Facebook is overvalued, particularly when compared to its projected growth. PEG ratios, which measure growth rate in relation to forward price to earnings, reflect this. Analysts typically use PEG ratios to measure company value, but they also incorporate more fundamentals and future focus. These two metrics, combined, paint an unflattering picture of FB’s prospects at its current price. The PEG and PE of FB are well below the average PE of the market, which is about three times its earnings.
However, the company’s history of growth is also worth considering. Facebook has faced a string of challenges in the last few years. But despite these challenges, it has maintained a robust growth rate and is still ahead of its competitors. The company’s daily active users are rising, and its business model is not being affected by regulatory issues. However, there will be challenges ahead. Apple’s implementation of privacy changes in the iPhone may make ad targeting difficult.
