Metaplatform stock is a buy regardless of whether it spikes or falls next week.
meta platform (NASDAQ:meta) has continued its winning streak so far in 2024, but Metaplatform stock has hit a wall in recent weeks. Investors are waiting for major developments before making a decision. The wait is almost over for Meta, which plans to release quarterly results and guidance updates on April 24, after the market closes.
META soared in February after the social media giant announced its last quarterly results, but the market’s reaction this time is likely to be very different. So is it time to bail out before earnings plummet? As we’ll explain below, that’s not necessarily the case.
Metaplatform stock return preview
Looking at Metaplatform’s recent headwinds, one might jump to the conclusion that the market is gearing up to “buy the rumor and buy more the news” on the company’s upcoming earnings release.
Metaplatform stock continues to receive high praise from Wall Street sellers. According to reports, so far this month, analysts at four different companies have reiterated their ratings on the stock as “buy” or the equivalent of “buy.” finviz.
Sellers have also unanimously raised their quarterly profit estimates over the past 90 days.
The company also continues to provide promising updates regarding its AI efforts. For example, Meta announced its latest in-house artificial intelligence accelerator chip. However, while all of this news strongly suggests that next week’s “beat and raise” results and further AI-related updates will cause META to soar, this is not guaranteed.
It’s still possible that investors decide to use earnings releases as an excuse to sell, rather than “buy more on the news” after the stock’s recent incredible rally. This is especially true as macro uncertainty reignites, raising questions about whether top tech stocks can sustain their current valuations.
Secular bull market remains the most important thing
In addition to the emergence of the AI megatrend, another factor driving the rally in mega-cap tech stocks is the prospect of lower interest rates. But based on Fed Chairman Jerome Powell’s latest comments, there is even more uncertainty about whether interest rates will start falling this year.
Indeed, some experts, such as Keith Lerner, co-chief investment officer at Trust, believe that Mag7 stock could still grow even in a “prolonged rise” scenario. It is claimed that there is. However, while this may eventually turn out to be true, it may not be the case at first. Further hints that high interest rates will continue through 2025 could temporarily cast doubt on the lofty valuations of these top tech giants.
Therefore, Metaplatform stocks could soon encounter turmoil due to valuation and macro concerns. Still, don’t see this as a reason to move to the sidelines until this storm passes. Timing the market is easier said than done, but the pursuit of it is largely futile.
Not only that, but given the stock’s reasonable valuation relative to its growth rate (25x expected earnings), the degree of short-term disruption associated with META could be much less severe than you think. There is a gender. First and foremost, the secular bull market, which is most important, is not weakening one bit.
Bottom line: hang in there, no matter the bottom line.
Previously, we showed META a clear path to prices above $750 per share. Macro concerns may limit the potential for multiple expansions for now, but the story could be different once these headwinds pass.
As Meta continues to develop and monetize its AI technology, the market will view the stock more aggressively, along with other “Mag 7” stocks with high AI exposure that trade at 30-40 times forward earnings. You may come to appreciate it.
Even after 2023, the Year of Efficiency, the company may still have room to cut billions of dollars in annual operating expenses. The main reason is to further scale back Metaverse efforts.
So when it comes to META, don’t get carried away with the immediate news.
Regardless of whether the stock price rises or falls after earnings, stick to your existing position. If you haven’t bought Meta Platforms stock yet, feel free to do so.
Metaplatform stock gets an A rating portfolio grader.
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.
