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Meta Platforms Inc Class A - Stock Quote FB

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Morningstar's Meta Platforms Inc Class A Stock Analysis

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Meta's Advertising Business Will Turn Around; Shares Undervalued

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

Meta stock has declined significantly over the last eight months as increasing competition and further enforcement of data privacy policies have slowed revenue growth and pressured margins. But we think the market is ignoring the high probability that double-digit advertising revenue growth will return on the back of the platform's network effect moat source, which has helped further increase the number of users and engagement on its apps. We continue to believe shares of wide-moat Meta, trading at half of our $384 fair value estimate, are very attractive.

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Meta Platforms Inc Class A's Company Profile

Business Description

Meta is the world’s largest online social network, with 2.5 billion monthly active users. Users engage with each other in different ways, exchanging messages and sharing news events, photos, and videos. On the video side, the firm is in the process of building a library of premium content and monetizing it via ads or subscription revenue. Meta refers to this as Facebook Watch. The firm’s ecosystem consists mainly of the Facebook app, Instagram, Messenger, WhatsApp, and many features surrounding these products. Users can access Facebook on mobile devices and desktops. Advertising revenue represents more than 90% of the firm’s total revenue, with 50% coming from the U.S. and Canada and 25% from Europe. With gross margins above 80%, Meta operates at a 30%-plus margin.

1601 Willow Road
Menlo Park, CA, 94025
T +1 650 543-4800
Sector Communication Services
Industry Internet Content & Information
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type Aggressive Growth
Employees 77,805

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