![]() ![]() Nonetheless, given the stellar growth in META's FCF generation at a CAGR of 17.07% between FY2019 and FY2026, we are cautiously hopeful for a turnabout, as the management tries to work through the Apple privacy changes and the normalization post-pandemic hyper-growth. Market is more bearish than we thought, given the massive downgrade in top-line estimates by -20.09% since February 2022 and -4.84% since August 2022. ![]() Over the next five years, META is expected to report revenue and net income growth at a CAGR of 8.45% and 10.18%, respectively. Nonetheless, its infamous choice of $10B debt offering in August 2022 has indeed caused some concerns, further fueling its stock pessimism. In the meantime, META investors need not worry about its immediate liquidity, due to the robust cash and equivalents of $13.48B on its balance sheet by FQ2'22. ![]() Otherwise, an eye-watering plummet of -70.55% and -23.2 percentage points YoY, respectively, due to its elevated capital expenditure of $22.68B in the last twelve months, representing a tremendous increase of 31.63% sequentially. The Meta stock has already been overcorrected to its previous October 2016 levels, with more potential bloodshed ahead if the Feds stuck to their hawkish stance.įurthermore, META's Free Cash Flow (FCF) is also impacted, with a projected generation of $2.88B and an FCF margin of 10.5% for FQ3'22, indicating a notable decrease of -37.79% and -5.5 percentage points QoQ, respectively. Therefore, it is no wonder that the stock has suffered thus far, with a massive -62.34% plunge YTD compared to the S&P 500 Index at -25.43% at the same time. Otherwise, an even more worrying YoY plunge of -44.61% and -13.2 percentage points, respectively. Otherwise, another tragic decline of -5.17% and -13.5 percentage points YoY, respectively.Īs a result, META's profitability continues to suffer, with projected net incomes of $5.09B and net income margins of 18.5% for the next quarter, indicating a drastic fall of -23.91% and -4.7 percentage points QoQ, respectively. Market Downright Obliterated Meta's Estimates & Valuationsįor its upcoming FQ3'22 earnings call, META is expected to report revenues of $27.51B and EBIT margins of 22.4%, representing a notable QoQ moderation of -4.54% and -6.6 percentage points, respectively. Thus, the Fed's November meeting is projected to result in another 75 basis points hike, causing more pain for the stock market, significantly worsened if the Feds increase their terminal rate from the previous projection of 4.6% to 5%. In light of this, we expect the September CPI to be released by 13 October 2022 to still show elevated inflation rates. The September PPI Index continued to prove that the elevated inflation rate is sticky, given the sequential 0.3% increase and YoY 7.2% increase in the core index. It doesn't help that US payrolls increased by 263K and the unemployment rate fell by 3.5% sequentially in September, pointing to the relatively robust labor market conditions. It continued to hit new lows previously never seen before in the past few years, pointing to the extreme levels of FUD in the stock market. While we remain Meta bulls and are confident of its rebound prospects once macroeconomic conditions improve, we are no longer confident of the stock's support level. ![]() Though the rest of the FAANG stocks have also suffered, none are as bad as Meta at -62.34% YTD fall and Netflix ( NFLX ) at -63.03% YTD, obviously. ( NASDAQ: META) has been absolutely decimated by now, with a -66.36% plunge since its September 2021 peak. Orla/iStock via Getty Images Investment Thesis The Downfall Of FAANG Stocks ![]()
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