Is META Stock a Buy or Sell? Here’s My Call.
If any company could be considered the poster child of the Big Tech wreck of 2022, it’s Meta Platforms (NASDAQ:META). The carnage of META stock was considerable, though some investors may choose to stand by CEO Mark Zuckerberg’s metaverse-centered vision for the company. All things considered, however, it’s wise to stay out of the trade and reassess the situation in a couple of quarters.
Meta Platforms delivered outstanding returns for its shareholders — or at least, it did until Zuckerberg rebranded the company from Facebook to Meta. In the 2020s, investors must decide whether to stick with this new but not necessarily improved company.
Interestingly, many financial traders are deciding to hang on for the ride. They may be crowding into the long side of an ill-timed trade, however, as Meta Platforms’ challenges could persist for a while.
What’s Happening With META Stock?
Technology stocks got hammered last year, and META stock wasn’t spared from the selloff. Alarmingly, Meta Platforms shares lost 64% of their value in 2022, versus around 19% for the S&P 500.
Meta Platforms was among the S&P 500’s worst performers last year, but oddly enough, a JPMorgan (NYSE:JPM) survey of investors indicates a high level of optimism.
In fact, 41% of the survey’s respondents identified Meta Platforms as the “company they expect will perform the best this year,” according to Bloomberg. This should set off alarm bells for contrarian investors.
Perhaps you’re on board with Zuckerberg’s plan for Meta Platforms to go all in on the metaverse. Or, maybe you feel that digital ad spending will rebound soon. These are risky bets, though. Cautious investors should wait for more data to come in before wagering on META stock.
It’s ‘Too Early’ for Tech Stocks like META
I tend to agree with David Lefkowitz, head of Equities Americas at UBS Global Wealth Management. Lefkowitz and other UBS analysts aren’t ultra-bullish on Meta Platforms now. This is a time for prospective investors to be patient, not hasty.
“[S]ome tech companies may still be vulnerable to earnings downgrades in the months ahead as customers continue to digest the surge in purchases made in 2020 and 2021,” Lefkowitz warned. He didn’t mention Meta Platforms specifically.
However, Meta Platforms has an upcoming earnings event in a few weeks. Chances are, it is among the “vulnerable” companies that Lefkowitz is referring to. He concluded that it’s “still too early to get back into tech stocks.” Even though “valuations for growth stocks are now less demanding, they are still high relative to value stocks,” Lefkowitz added.
So, Is META Stock a Buy or Sell?
I’m not saying that anyone should panic-sell META stock. Yet, the stock definitely isn’t a buy now, and selling some shares isn’t a terrible idea.
Meta Platforms’ next earnings report could provide more insight into the company’s financial health. Extra-cautious investors could even wait for the next couple of earnings events before reassessing Meta Platforms. Then, if the data is largely positive, it’s possible to enter or re-enter with a more confident long position in Meta Platforms.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
