Meta Platform’s stock price continues its heavy selloff. The company has been weighed down by expensive product launches linked to the Metaverse trend and a declining advertising segment:
- Shares of Meta Platforms saw the biggest selloff of all five US “BigTech” companies since the fall of 2021. Meta faces increased competition from other platforms such as TikTok and Snap.
- Meta Platforms reported a workforce of 83,553 at the end of the second quarter, an increase of 32% from a year ago. The company now plans to cut costs by 10%, mostly through layoffs. Alphabet, Amazon and Netflix also followed this path.
- The global technology market is experiencing declines, and the global recession may suppress demand for new devices, increasing costs. Uncertainty also comes from the semiconductor manufacturing sector, and without free access to chips, it is not possible to make many products like Oculus.
- High inflation caused companies to redirect spending on the most necessary products and the technology market suffered. The current trend is also a “helping hand” for the company’s growing Metaverse trend, which prompted CEO Mark Zuckerberg to change the company’s name last fall. However, the multibillion-dollar investment in the development of technology in the virtual world seems unlikely to bear fruit in the current macroeconomic conditions, as noted by investors today.
- The increased investment in an uncertain new business segment made Meta stocks considered more risky compared to its competitors, which led to a negative increase in volatility in this case. The company’s valuation has fallen by almost 65% since the beginning of the year, against “only” a 15% decline for Apple.
- The stock sale dropped Mark Zuckerberg’s fortune from $71 billion to $55 billion. The billionaire is the 20th richest person in the world – the lowest since 2014.
Meta Platform (META.US), interval D1. The company continues its downtrend, with the stock price at oversold levels in March 2020 and close to 2018 lows, which may signal an upcoming rebound. The RSI near 31 points is in an area that has proven to be a suitable place to buy in the past. The valuation is increasing more and more than a basic level, with the P/E ratio approaching 11 points, which is twice lower than the average of companies in the NASDAQ index. The price-to-book ratio is also improving, above 3, compared to the average of 4.9. The Meta Platforms business, on the other hand, has never faced such major problems and declining profits. However, high interest rates and the prospect of an economic slowdown may lower analysts’ bets on Meta Platform’s stock price. If the company shows that it is able to face the challenges of the new macroeconomic conditions, the current valuation may prove attractive for contrarian investors. Source: xStation5
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