2023: META Could See Another 70% Downside

Nov. 11, 2022 6:00 AM ETMeta Platforms, Inc. (META)241 Comments
Steven Cress profile picture
Steven Cress
22.24K Followers

Summary

  • YTD, Meta has fallen almost 70% in share price. Its Price to Earnings Growth multiple at 3.88x is at a 236% premium to the Communication Services sector median of 1.15X.
  • If Meta’s PEG multiple drops to the sector median, the stock could fall 70% in 2023. Despite headwinds, Meta continues investing billions in technology that no one wants.
  • Laying off more than 11,000 staff doesn’t change the firm’s Metaverse strategy. In the last 90 days, 38 analysts revised their earnings estimates down.
  • Facing macro headwinds, data and privacy concerns, and declines in core metrics like cash flow, EPS, and momentum, Seeking Alpha’s Factor Grades and Quant ratings rate this stock as a Hold.
  • 99.99% of the time, I stick with my quant ratings. Given Meta’s extremely high PEG ratio, free cash flow crash, and consecutive earnings misses, I’m putting on my analyst hat and rating this stock a Strong Sell.

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Meta stock has fallen nearly 70% YTD. If I had told you at the beginning of 2022 that Meta would fall 70%, you would have slammed the door in my face. You might be thinking the same thing

Teens and Social Media Use Survey

Teens and Social Media Use Survey (PEW Research)

Teens Social Media Usage Chart

Teens Social Media Usage Chart (PEW Research)

Meta's Free Cash Flow Per Share Catastrophe

Meta's Free Cash Flow Per Share Catastrophe (S&P Global, Seeking Alpha)

Net Capital Expenditure Rabbit Hole

Net Capital Expenditure Rabbit Hole (S&P Global, Seeking Alpha)

LinkedIn Poll

LinkedIn Poll (LinkedIn)

META Stock Quant Rating & Factor Grades

META Stock Quant Rating & Factor Grades (Seeking Alpha Premium)

META Momentum Grade

META Momentum Grade (Seeking Alpha Premium)

FB Monthly Active Users

Facebook Monthly Active Users (Meta Q3 Investor Presentation)

META Stock Growth Grade

META Stock Growth Grade (Seeking Alpha Premium)

This article was written by

Steven Cress profile picture
22.24K Followers
Head of Quantitative Strategies at Seeking Alpha. Data analysis and interpretation have taken center stage in my career. For my purpose, the interpretation of data is the process of making sense of statistics that have been collected, analyzed, and scored. This skill-set has served as a solid foundation for me to identify trends and make transparent predictions in the course of money management. It has also allowed me to develop user-friendly web-based tools that furnish individuals with the indicators and signals to instantly interpret the strength or weakness of a company's value. Importantly, this expertise has helped me build Wall Street trading desks, launch international hedge funds, and construct a SaaS FinTech investment research company. Prior to my role at Seeking Alpha as the Head of Quantitative Strategies, I founded a Hedge fund and Asset Management company (Cress Capital Management), I was the Head of International Business Development at Northern Trust, and the majority of my career was at Morgan Stanley running a proprietary trading desk.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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