Apr 19, 2022
Meta, formerly known as Facebook, is a major player in the public eye. 2.89 billion people throughout the world utilize this social network. The second quarter of 2021 saw Meta make more than $29 billion in sales, so it's no wonder it's a popular investment.
In November of 2021, Meta's stock was selling for about $341, up from roughly $120 at the beginning of 2017. If you're interested in investing in a fast-growing company or love Meta's social networking platform, you might consider purchasing Meta stock.
As of August 2021, one Meta share was trading at around $360 per share. This is a substantial sum for only one share of stock. 1 However, this does not imply that the stock is expensive.
Knowledgeable investors view the share price of a firm as its earnings. By dividing the stock price by the company's earnings per share, the P/E ratio is calculated. At the end of November 2021, Meta's price-to-earnings ratio was 24.
Meta may be a social media firm in the communications sector. Despite this, it's frequently grouped in with other emerging technology-driven companies like Microsoft and Google (often known as FAANG and FAAMG stocks).
These businesses expand rapidly, but their stock prices are prone to extreme fluctuations. Meta is a high-profile corporation. Thus this may be even truer for the company. Using the term "beta," you may sense Meta's volatility.
Even though Meta is a fast-growing company, its revenues are reinvested back into the firm to help it grow even faster. As a result, stockholders get no cash distributions in dividends from the company.
As a shareholder in Meta, you can rest easy knowing your money is being reinvested in the company's growth, leading to a better value for your shares. For the time being, Meta shares may not be a passive source of income. Is it wise to sacrifice income in exchange for greater growth?
Even if you don't own Meta directly, you may already be involved in the company through a mutual or exchange-traded fund (ETF).
Meta is one of the world's most valuable firms; hence, most of its largest mutual funds have a stake in it. New investors can purchase Admiral Shares (VFIAX), a Vanguard 500 Index Fund that invests 2% of its assets in Meta.
Investing in Facebook's stock is only one method of doing so. By acquiring index funds or ETFs shares, you may also invest in Facebook (ETFs). Both may be seen on your online brokerage's website.
The danger of investing in a single stock is minimized by investing in a fund that holds many equities. By using funds, you may spread your investments across hundreds or even thousands of firms, boosting your overall chances of success without placing all your bets on just one company.
You may already own Facebook shares if you have invested in mutual funds, index funds, or exchange-traded funds (ETFs) based on the S&P 500 or Nasdaq 100.
Your portfolio will be exposed to all of the firms in the S&P 500 if you invest in an S&P 500 index fund. Apple (AAPL), Amazon (AMSN), and Tesla are all included in this category – as well as Costco (COST), Starbucks (SBUX), and a host of other non-tech firms (SBUX).
If you're a long-term investor who feels that the metaverse is the next big thing in social media, Meta is a fantastic pick.
Meta has approximately 3 billion monthly active users in terms of traditional social media. Its Oculus headsets have a dominant position in virtual reality hardware and aim to spend roughly $10 billion this year alone on augmented and virtual reality.
What Scott Turman of BrightRay Publishing calls "37 percent -ish of the world's population login onto their current site every month" is Meta's "metaverse spending more than most companies expect to produce in revenue." According to this statement, Zuckerberg has an enormous head start in every aspect possible.
Even while the metaverse can flourish in the long run, Meta is now facing significant obstacles.
Facebook's advertising revenue has been hurt by a recent update in Apple Inc.'s (AAPL) mobile operating system that allows users to opt out of being monitored throughout their online activities.
If Apple's iOS 14 modifications had not been implemented, Facebook would have witnessed positive quarter-over-quarter revenue growth. Facebook COO Sheryl Sandberg claimed in a conference call accompanying the company's quarterly results before the Meta announcement.
With billions of users, Meta is a huge corporation. Since coming public in 2012, it has generated billions of dollars in revenue and made much money for investors. However, the stock hasn't always performed well. Because Meta is regarded as a volatile company, you should be prepared for considerable price swings.