The worst may be over for Meta Platforms (META).
For most of 2022, the stock was a disaster. In the third quarter, for example, the company posted its second quarterly decline. It provided a weak fourth quarter outlook. It was losing billions on the metaverse. In fact, Reality Labs, which is developing the virtual reality and related augmented reality technology of the metaverse, lost $9.4 billion.
The slowdown in online spending didn’t do too much to help either. In fact, According to Dentsu’s biannual Global Ad Spend Forecast—which examines data from across 58 markets—the level of spend will slow by 1.6% in comparison to its previous prediction of a 5.4% increase next year, as noted by Adweek.com. Coupled with a potential economic recession, and a slowdown in consumer spending, and things don’t look so hot.
However, even with all of the chaos, Meta Platforms (META) just caught an upgrade from JP Morgan analyst Doug Anmuth. “Heading into 2023, we believe some of these top and bottom line pressures will ease, and most importantly, Meta is showing encouraging signs of increasing cost discipline, we believe with more to come,” he said, as quoted by Yahoo Finance.
The analyst now has an overweight rating on the META stock, with a price target of $150, and believes there are five key drivers that could send the stock higher. Those include:
- Better cost controls by management on both total expenses and capital expenditures.
- Lessening sales impact from Apple iOS privacy changes.
- The company stands to compete more effectively against surging rival TikTok.
- Reels monetization may gain steam and become “at least” neutral to sales in later 2023.
- Valuation on the stock is “compelling” after the steep 2022 drop.
Even with markets deep in the red, META is up $4.10 on the day.
Technically, if the META stock can break from consolidation around $120.25, it could potentially refill its bearish gap around $130 a share.
Still, we urge caution with this stock. While the upgrade is great news, it’s just one opinion for now. Plus, there are still plenty of negatives that could weigh the stock and markets down.