Sorry, but You Can’t Turn Back the Clock on META Stock
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Meta Platforms (NASDAQ:META) stock was down by an eye-watering 29% over the last five days. Apparently, financial traders weren’t pleased with the company’s sizable spending plans for fiscal 2023.
It also didn’t help that Meta Platforms indicated higher spending as well as lower revenue and income during 2022’s third quarter. None of this bodes well for Meta Platforms as CEO Mark Zuckerberg’s big pivot into the metaverse may be too jarring for the market to handle right now.
Remember when the company was called Facebook and it was focused mainly on its popular social media platform? Those were simpler times, to be sure. It was a shock when Zuckerberg suddenly announced changes to the company’s name, its stock ticker symbol and its business model.
As newly minted Meta Platforms started spending mega-bucks on this newfangled metaverse concept, financial traders were flummoxed.
The last thing they wanted to hear was the Meta Platforms would ramp up its spending on the metaverse. Thus, the company’s third-quarter report presented investors with a decision to make. Overwhelmingly, they decided to dump their Meta Platforms shares – and you might not want to buy what they’re selling.
META Stock Traders Get a Big Shock
Is it still possible that the metaverse will turn out to be the greatest thing since sliced bread? Sure, but not every financial trader is willing to go all-in on the metaverse with Zuckerberg. Besides, during this time of elevated inflation, some investors had probably hoped that Meta Platforms would dial back its spending.
Just recently, Meta Platforms announced a new headset called Quest Pro. Metaverse aficionados might like it, though they probably won’t like the fact that the Quest Pro starts at $1,500. That’s not an attractive price point for many consumers in a time of high inflation.
Speaking of big-time spending, not everyone is on board with Meta Platforms spending $10 billion on the metaverse in 2021. Then, investors recently learned that Meta Platforms anticipates 13% year-over-year (YOY) expense growth for FY2023.
Meta Platforms Posted Mega-Disappointing Data
Wall Street only expected Meta Platforms to model 7% YOY expense growth for FY2023, so the announcement alarmed investors. It’s one of the main reasons META stock plunged after the company issued its third-quarter 2022 financial press release.
There were other major sticking points, as well. First of all, Meta Platforms increased its costs and expenses by 19% YOY. Again, this isn’t necessarily what investors want to see in a high-inflation environment.
Then, there were the disappointing top- and bottom-line Q3 results. On a YOY basis, Meta Platforms’ revenue slipped 4%, its income from operations fell 46% and the company’s net income dropped 52%. Additionally, Meta Platforms’ earnings per share (or EPS) declined 49% YOY.
Be Cautious with META Stock Now
Clearly, Meta Platforms is ramping up its spending even while the company’s income is declining and inflation is still elevated. Some financial traders might fear that this is a recipe for disaster.
Granted, some investors may still be on board with Zuckerberg’s gigantic bet on the build-out of the metaverse. If so, then you’re free to buy META stock at its now-reduced price. Just be cautious with your share position size, and keep a close watch on Meta Platforms’ spending trajectory during the coming quarters.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, Louis Navellier had a long position in META. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.