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Meta Platforms, Inc. (META) Stock Analysis: Overvaluation and Potential for Growth

StockInvest.us, 2 months ago

StockInvest.us Fundamental Analysis

Meta Platforms, Inc., listed under the ticker META on the NASDAQ exchange, holds a market capitalization worth $808.09 billion. With 2.67 billion shares outstanding, Meta Platforms recorded a closing price of $302.55 on September 18, 2023. The stock's trading volume for the day was 13.34 million, considerably lower than its average volume of 23.35 million. Meta has displayed relatively high price volatility with an average true range (ATR) of 2.91. The EPS is 8.44, and the price-to-earnings (PE) ratio is 35.85, suggesting the stock may be overvalued when compared to the industry average.

Meta Platforms' financial performance over the past year has been varied. The stock hit a year low of $88.09. However, it also hit a year high of $326.2, indicating an upward trend. The last known price remains near its 50-day moving average of $302.11, and considerably above its 200-day moving average of $222.70, suggesting an upward-moving price trend in the medium term.

The relative strength index (RSI14) stands at 61, indicating that the stock is approaching overbought levels. The negative MACD (3-months) at -0.37 implies a bearish trend in the short term. The discounted cash flow (DCF) suggests the intrinsic value of the stock is roughly $307.98, slightly above the last trading price of $302.55.

In terms of analysts' consensus, Meta Platforms' stock is predominantly rated as a '"buy" with 36 endorsements, eight "holds", one "sell", and a single "strong buy". The consensus target price is $251.07, with a low target of $105 and a high target of $466.

Recent News

Recent news mentions Meta Platform's overall presence amidst beneficial mid-cap ETFs, indicating the company's sustained trend of attracting investor attention. Additionally, focus is drawn to Meta Platforms' advancement in the realm of generative Artificial Intelligence, which presents considerable growth potential. In particular, it's suggested that high-value growth stocks like Meta may eventually reach the status of the $2 trillion club, a feat only previously achieved by tech giants like Apple and Microsoft.

META Technical Analysis

The technical analysis aligns with the fundamental perspective conveyed above. Meta has a support level at $294.26, slightly below the price low recorded, and a resistance level at $309.34, suggesting potential restraint on the stock's short term upside potential. The stop-loss stands at $289.42, indicating a possible downward movement given Meta's current price level.

Stock Performance Prediction

Based upon the available information, it can be estimated that the trading price for Meta Platforms on the upcoming trading day, September 19, 2023, will hover around the 50-day moving average of $302.11. It might fluctuate between the support and resistance levels of $294.26 and $309.34, respectively.

For the upcoming week, similar trends might follow. However, given the close proximity to the quarterly earnings announcement set for October 24, 2023, more investor attention might cause the stock to experience heightened volatility and potentially break through its resistance level.

Final Recommendation

Given the above analysis, Meta Platforms, Inc. (META) is a "Hold." Even though the stock is rated predominately as a "buy" by analysts, the overvaluation suggested by the PE ratio and the overbought levels suggested by the RSI indicate some degree of caution. Holding stocks might bring benefit from any potential upside as the earnings report approaches while guarding against any immediate downside risks. Additionally, the company’s strength in AI and potential to join the '2 trillion club' in future signals its long-term growth prospects.

Check full META forecast and analysis here.