Meta Platforms jumps 14%. Can it turn tech around?

Posted: 27 April 2022 5:57 pm
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The former Facebook jumped after a mixed earning report. Here’s where it and the other FAANG stocks stand.

The Nasdaq Composite traded flat today after a 4% drop Tuesday, but tech stocks may find some boost in earnings from Meta Platforms (FB), which reported after the bell.
Meta, the former Facebook, topped estimates with earnings per share of $2.72, though revenue was lighter than expected. Shares jumped 13% initially in after-hours trading, so the market seems to have expected worse.
Meta is the latest of the so-called FAANG stocks to report, that group of market giants who led tech stocks up through late last year but now sit from 14% to 66% off their highs.
So far, bargain hunters haven’t been inspired to step in even for these widely held stocks. And with inflation and supply chain worries weighing on their numbers, it’s far from clear when that turn will happen or that Meta can turn the tide.

What Meta reported

The initial reaction is certainly better than the one that followed Meta’s last earnings report in February, when a first-ever decline in users sent Meta stock down by 26%. All told, Meta stock started today down by nearly half in 2022, and 53% from its 52-week-high.
Today’s Q1 report wasn’t stellar, with the company missing expectations for revenue and lowering guidance for the current quarter. But news reports note that it gained users, with DAUs (Daily Active Users) rising to 1.96 billion, up from 1.93 billion in Q4.
Still, the company noted that the Ukraine war and economic outlook will limit growth in the near term — common themes for tech earnings so far this season.

Is it a bargain?

Given the mixed report, it’s not clear the after-hours surge in Meta stock will carry into Thursday’s market. Mixed numbers from Google and Microsoft didn’t lead to a Nasdaq rally today.

Still, at today’s prices Meta will look like a bargain to some long term buyers, particularly those who believe its expensive transition to the so-called Metaverse will pay off in the long run.
Facebook is trading at levels it first hit in 2017. That’s zero return for almost five years.
For more details on the stock, see our dedicated guide.

Not the worst of the FAANGs

Meta isn’t the worst of the FAANGs in this tech bear market thus far.
That title goes to Netflix, down 66% in 2022 and 71% off its high. Slowing usage growth has been a big concern, as has increased competition from new streaming platforms, some of which used to provide Netflix with content.
The others show losses more in line with the Nasdaq’s overall decline – Apple (AAPL), down 14% YTD; Amazon, down 26%; and Alphabet, down 22%. That suggests they’re down more because of the overall market worries rather than company-specific issues.
That doesn’t mean they’ll reward bargain hunters more than Netflix or Meta. But there may be fewer worries to keep an eye on with them.

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