Why Facebook Parent Meta Platforms is a Bargain Buy

Some pros say that cost cuts (including expected massive layoffs) and a deeply discounted valuation make the one-time high flyer META a value play now.

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(Image credit: Getty Images)

Shares in Meta Platforms (META (opens in new tab), $90.79) popped on Monday following reports that the Facebook parent is planning to cut costs by slashing thousands of jobs. 

Apart from the fact that this is crushing news for the folks losing their livelihoods, the uptick in META's stock doesn't amount to much in the wider scope of things. Not when you consider that Mark Zuckerberg's company is suffering one of the more epic share-price meltdowns in recent memory. 

To put META's market carnage in perspective, before Monday's jump, shares had lost 76% of their value since hitting an all-time closing high of $382.18 on Sept. 7, 2021. META's market capitalization, which peaked at $1.08 trillion not so long ago, is down to about $250 billion. 

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That's smaller than Coca-Cola (KO (opens in new tab)) or Procter & Gamble (PG (opens in new tab)) or Walmart (WMT (opens in new tab)) – hardly companies with designs on being at the center of the next great revolution in tech.

Any time a stock as admired and once high-flying as Meta goes into freefall, it's only natural for analysts and investors to ask if shares are a screaming bargain buy.

Fair enough. Selloffs are frequently overdone, after all. Stocks get beaten down beyond reason when emotions overwhelm a focus on the fundamentals.

That being said, there's a Wall Street cliche warning folks about buying a stock when it's collapsing as META is: Don't try to catch a falling knife. In META's case, this looks more like trying to catch a falling Guillotine blade with your neck.

And yet analysts collectively give META stock a consensus recommendation of Buy, with fairly high conviction.

Of the 56 analysts issuing opinions on META tracked by S&P Global Market Intelligence, 27 call it a Strong Buy, nine say Buy, 17 have it at Hold, two rate it at Sell and one calls it a Strong Sell.

Most intriguing is their average price target. At $157.97, Wall Street gives META stock implied upside of 66% in the next 12 months or so. 

Bulls such as Oppenheimer analyst Jason Helfstein remind clients that Meta Platforms remains the world's largest social networking company, with 3.7 billion monthly users across all properties. That gives it enormous leverage across its extant businesses, and a huge leg up as it moves to building out the metaverse.

"While META's historical advantage has been the social graph and the ability to share and follow pictures and videos uploaded by users, the company now believes it must evolve to use advanced algorithms to deliver content to users and leverage its social graph in the Metaverse," writes Helfstein, who rates the stock at Outperform (the equivalent of Buy). 

If META can deliver higher-than-expected monetization via Instagram, Stories and video, as well as monetize its new e-commerce function and generate greater-than-expected user engagement, shares will one day look ridiculously cheap at current levels. 

That's the bull case – or part of it – anyway. And even META optimists acknowledge this is going to be a show-me stock for several quarters, at the very least.

Whether META can pull out of this nosedive very much remains to be seen. On the other hand, the idea is to buy low. If Zuckerberg and company can pull this off, META will have proven to be a steal during what has become a truly dark period for long-term shareholders. 

Dan Burrows
Senior Investing Writer, Kiplinger.com

Dan Burrows is a financial writer at Kiplinger, having joined the august publication full time in 2016.

A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics and more.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.