Why Bears Should Bet On This Overvalued Tech Powerhouse

FB reports on Q4 and full year of 2021 earnings on Feb. 2

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Meta Platforms, Inc. (NASDAQ:FB), formerly known as Facebook Inc., is one of the biggest tech companies in the world with a market cap of $839 billion. FB builds technologies that help people connect, find communities, and grow businesses. Meta Platforms’ portfolio of apps includes Messenger, Instagram, and WhatsApp. FB is also now moving toward immersive experiences like augmented and virtual reality. This afternoon, FB was last seen trading up 3% at $311.03.

Earlier this month on Jan. 4, Meta Platforms announced that the tech company's fourth quarter and full-year 2021 results will be released after the market close on Wednesday, Feb. 2. Facebook reported earnings of $3.22 per share for Q3. Covering analysts anticipate that Meta Platforms will deliver an increased earnings per share (EPS) of $3.84 for the upcoming Q4 earnings report.

Meta stock has increased by about 19% year-over-year but have shed 11% year-to-date. The equity is also currently down 21% from the all-time high of $384.33 that it reached in early September.

From a fundamental point of view, Meta stock is in a great position for long-term growth. FB holds an excellent balance sheet with $58.08 billion in cash and $13.22 billion in total debt. Meta stock also trades at a price-earnings ratio of 21.59, which is a solid valuation for a company generating eleven figures worth of net income.

Moreover, Meta Platforms has grown its revenues and net income 101% and 82%, respectively, since fiscal 2018. In addition, FB is estimated to increase its earnings by 1.93% and its revenues by 19% in 2022. However, Meta stock's price-sales ratio is on the higher end, with the value coming in at 7.56. Nonetheless, Meta stock seems to be a clear and obvious pick for long-term investors looking for high reward potential and low risk.

A tremendous number of analysts covering FB are leaning optimistic, leaving ample room for downgrades in the near future. Specifically, 23 of 26 brokerages sport a "buy" or "strong buy" recommendation, and the stock's average 12-month price target comes in at $399 -- a nearly 30% premium to current levels.

 

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