Why Meta Stocks Have Jumped 464% Since 2022

The Remarkable Recovery of Meta Stocks

Meta (Facebook) stocks have experienced an exceptional rebound following a historic plunge in November 2022.
According to expert analysis by Anthony Di Pizio, after hitting rock bottom at $90, crucial changes were triggered in the company’s management.
From a stock value perspective, these changes proved to be highly successful.

The Turning Point

Investors initially believed that Meta was neglecting its core social media platforms, Facebook and Instagram, in favor of spending billions on projects like the metaverse, which were generating minimal revenue.
This perception exerted significant pressure on Meta’s profitability.
However, CEO Mark Zuckerberg decided to make drastic changes that led to a 426% surge in Meta stocks.
The true reason behind this surge was not AI-related euphoria.

The Resurgence

Following a 76% drop from its all-time high in November 2022, Mark Zuckerberg initiated a turnaround.
By mid-2023, he had cut over 21,000 jobs while committing to more cautious spending in the Metaverse and significant investments in artificial intelligence (AI) to enhance Facebook and Instagram.
The streamlined workforce and cost structure resulted in a sharp increase in Meta’s profitability.

Impressive Financial Results

In the recent second quarter of 2024 (ending on June 30), Meta’s net income surged by 73% compared to the same period the previous year.
This followed more than a doubling of net income in each of the preceding three quarters.
The improved profitability propelled Meta’s stocks by 464% from the November 2022 low, trading at over $508.

Potential Growth Ahead

Despite the significant growth, experts believe that Meta’s story is far from over.
The company’s net income over the last four quarters amounted to $19.59 per share, positioning its stock at a price/earnings (P/E) ratio of 25.9.
This represents a 16% discount compared to the Nasdaq-100’s P/E ratio of 30.9, indicating that Meta stock is still undervalued compared to its tech counterparts.

While Meta is advancing in AI like most tech giants, this serves as a reminder that stock price performance is often driven by a company’s earnings power rather than the latest trend.

DISCLAIMER

The information and insights provided in this article should not be the sole or primary basis for making investment decisions.
Readers are advised to exercise their freedom and full responsibility in their investment choices, considering their risk tolerance and time horizon.
The content of this article is for informational purposes only and should not be construed as an offer or solicitation for public savings.