Meta Platforms Fallout Extends on Earnings Disappointment

Meta’s market cap value was unable to recover from its notable early 2019 plunge

Managing Editor
Nov 4, 2022 at 12:24 PM
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Subscribers to Chart of the Week received this commentary on Sunday, October 30.

Facebook parent Meta Platforms Inc. (NASDAQ:META) is fresh off a dismal earnings report, which looks to be singing in unison with the tech sector’s earnings season selloff. The company reported a revenue of $27.71 billion, which topped estimates, but ultimately failed to impress with a weaker-than-expected current-quarter outlook. Big Tech names such as Amazon.com (AMZN) also suffered disappointing reports, but the biggest takeaway for the broader market is a universal overspending mixed with slowing economic growth.

However, this pullback is far from sudden for the shares of META, which have been struggling in more ways than one since late 2021. Specifically, the stock’s market cap value has suffered greatly, shedding two-thirds of its value since its October 2021 announcement that it would soon change its name from Facebook to Meta – which went into effect on June 9, 2022, per information from Senior Analyst Christ Prybal. At the time of the announcement, the company sat at a value of $882 billion. This rebrand, inspired by founder and CEO Mark Zuckerberg, was to initiate the idea of a "metaverse," or a world focused on improving the quality of the time consumer spend in various tech facets.

A broader look, per the chart below, shows Meta’s market cap value was unable to recover from its notable early 2019 plunge. And things got worse from there. META has fallen well below its $111 per share market value, which translates to a roughly $300 billion market cap level ($111 x 2,700,000,000 = $299,7000,000,000). At the time of this writing, however, the market cap is reading at an even lower, $265.90 billion.

Now sitting at seven-year lows and under the pressure of its 80-day moving average, it comes with little surprise that the equity has been berated with bear notes within the past few days. No fewer than 25 brokerage firms have moved in with price-target cuts and/or downgrades following the security’s earnings disappointment, but there looks to be room for even further scrutiny. Heading into Friday’s trading, 21 of 31 covering analysts sported a "buy" or better recommendation.

METACotwchart

 

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