Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      A history of the decoders made by M-Net and DStv

      30 November 2023

      How South Africa’s banks became bakgat

      30 November 2023

      Putin’s daughter pursues digital plan in push to embrace Africa

      30 November 2023

      MTN slashes prepaid data prices: 200GB for R399

      30 November 2023

      Spar confident worst of ERP disaster now behind it

      30 November 2023
    • World

      ‘Go f… yourself’: Musk lashes out at fleeing advertisers

      30 November 2023

      Microsoft to take non-voting position on OpenAI board

      30 November 2023

      Hackers stole customer support data in Okta breach

      29 November 2023

      Orange withdraws from process to buy into Ethio Telecom

      28 November 2023

      Musk’s X hit by advertiser exodus

      27 November 2023
    • In-depth

      Africa has a feature phone problem

      23 November 2023

      Is your ISP monitoring your online activity?

      10 November 2023

      The real Big Brother Africa

      2 November 2023

      Compared: Starlink prices around the world – including Africa

      30 October 2023

      Africa is booming

      30 October 2023
    • TCS

      TCS+ | OneTrust’s Joseph Byrne: privacy risk management done right

      29 November 2023

      TCS+ | Ricoh – safe and secure role in today’s digital ecosystems

      27 November 2023

      TCS+ | NEC XON on going toe to toe with cybercriminals

      22 November 2023

      TCS | How ShotSpotter is fighting gun crime in Cape Town

      13 November 2023

      TCS+ | SOC-as-a-service: CYBER1 SOC and the future of cybersecurity

      13 November 2023
    • Opinion

      Could Cape Town become Africa’s Silicon Valley?

      14 November 2023

      Chris Kruger: What I learnt in my decades in IT leadership

      6 November 2023

      Ransomware attacks: how South African companies should respond

      6 November 2023

      Fibre providers urged to go ‘nano’ to cut costs

      31 October 2023

      Big banks, take note: PayShap should be free

      20 October 2023
    • Company Hubs
      • 4IRI
      • Africa Data Centres
      • Altron Document Solutions
      • Altron Systems Integration
      • Arctic Wolf
      • AvertITD
      • CallMiner
      • CoCre8
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • E4
      • Entelect
      • ESET
      • Euphoria Telecom
      • iKhokha
      • Incredible Business
      • iONLINE
      • LSD Open
      • Maxtec
      • MiRO
      • NEC XON
      • Next DLP
      • Paratus
      • Ricoh
      • Skybox Security
      • SkyWire
      • Velocity Group
      • Videri Digital
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud computing
      • Consumer electronics
      • Cryptocurrencies
      • E-commerce
      • Education and skills
      • Energy
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Metaverse and gaming
      • Motoring and transport
      • Open-source software
      • Public sector
      • Science
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Sections » Investment » How Meta went from dog to investor darling

    How Meta went from dog to investor darling

    A leaner Meta Platforms is impressing investors, with analysts turning bullish amid cost cuts and stabilising advertising trends.
    By Agency Staff4 April 2023
    Facebook Twitter LinkedIn WhatsApp Telegram Email
    Mark Zuckerberg

    A leaner Meta Platforms is impressing investors, with analysts turning more bullish as cost cuts coupled with stabilising advertising trends make the Facebook owner’s stock look more durable in a looming economic slowdown.

    The shares have surged 140% from a seven-year low in November as Meta started cutting thousands of jobs in light of falling sales. The company announced further layoffs last month and pledged to be more efficient, adding kindling to the rally.

    More than two dozen brokerages have increased their price targets on the stock since the second round of job cuts was announced. Analysts also have pushed up Meta’s 2023 earnings per share estimate by 15% over the past three months. Morgan Stanley’s Brian Nowak in March restored his buy-equivalent rating after sitting on the sidelines for less than five months.

    Meta’s shares are still much cheaper than its big tech peers and the Nasdaq 100 Index

    While the ad business has slowed, it’s at least stabilised, bulls say. And in another positive sign for earnings, changes in Apple’s privacy policy that make it harder to target iPhone users with ads have now been in place long enough that they’re no longer affecting Meta’s year-over-year growth rate.

    “The catalyst for Meta’s recent rally is likely traced to both extensive cost-cutting measures and adjusting to the negative effects of Apple’s privacy changes, which significantly hurt ad revenue,” said Mike Akins, founding partner at ETF Action, the index provider of Amplify’s MVPS ETF. “To a large extent, Meta’s recent surge is simply recovering from being oversold.”

    Because analyst earnings estimates are rising along with the stock price, Meta’s shares are still much cheaper than its big tech peers and the Nasdaq 100 Index. Trading at 17 times forward earnings, Meta is below its historical 10-year average of 26x. In contrast, Amazon.com trades at 36x, Microsoft’s price-earnings ratio is 28, Apple is at 26 and the tech-heavy gauge sells for 24x.

    Durable megacap

    Morgan Stanley’s Nowak called Meta the most durable megacap if consumer spending weakens, since the company’s cost reductions have been bolder than at peers such as Alphabet.

    Concern about inflation and a potential recession have squeezed ad budgets at businesses, crimping the primary revenue stream for companies like Meta, Google parent Alphabet and Snap. But some analysts, such as Guggenheim’s Michael Morris, are also seeing more stability in overall advertising demand.

    Still, some investors may be unwilling to pay up now for Meta after the blistering rally since November, especially because there may well be a recession in the offing. Even if Meta’s ad business holds up better than rivals’, if the downturn is steep enough all media stocks will suffer.

    Until the beginning of last year, Meta averaged revenue growth of 42% over the decade since 2012. The company shocked investors by reporting its first ever sales decline last year. Now with trends stabilising, its sales are set rise by 4.7% this year, with growth more than doubling to about 11% in 2024.

    While that’s a much slower cadence than investors are used to, Meta under CEO Mark Zuckerberg has managed to resume growing.

    “In many respects. what Mark Zuckerberg has done in the last couple of months is begin to look at running the company like a regular company as opposed to a tech company with top-line growth that can cover a lot of mistakes, because they really didn’t have that anymore,” said Mark Stoeckle, CEO of Adams Funds, which owns the stock.  — Subrat Patnaik, with Tom Contiliano, (c) 2023 Bloomberg LP

    Get TechCentral’s daily newsletter

    Alphabet Apple Facebook Google Mark Zuckerberg Meta Meta Platforms
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email
    Previous ArticleBill Gates criticises calls to pause AI development
    Next Article Google’s Bard AI readily spews conspiracy theory nonsense

    Related Posts

    A history of the decoders made by M-Net and DStv

    30 November 2023

    ‘Go f… yourself’: Musk lashes out at fleeing advertisers

    30 November 2023

    How South Africa’s banks became bakgat

    30 November 2023
    Promoted

    5G home broadband a big opportunity for African operators

    30 November 2023

    DCA, Huawei and WBBA host Africa Fibre Forum 2023

    30 November 2023

    Accelerate innovation with platform engineering

    30 November 2023
    Opinion

    Could Cape Town become Africa’s Silicon Valley?

    14 November 2023

    Chris Kruger: What I learnt in my decades in IT leadership

    6 November 2023

    Ransomware attacks: how South African companies should respond

    6 November 2023

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2023 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.