Yahoo Finance Earnings are growing at Meta Platforms (NASDAQ:META) but shareholders still don't like its prospects
Investing in stocks comes with the risk that the share price will fall. And unfortunately for Meta Platforms, Inc. (NASDAQ:META) shareholders, the stock is a lot lower today than it was a year ago. The share price is down a hefty 52% in that time. At least the damage isn't so bad if you look at the last three years, since the stock is down 15% in that time. The falls have accelerated recently, with the share price down 26% in the last three months. Of course, this share price action may well have been influenced by the 19% decline in the broader market, throughout the period.
If the past week is anything to go by, investor sentiment for Meta Platforms isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
View our latest analysis for Meta Platforms
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Even though the Meta Platforms share price is down over the year, its EPS actually improved. It's quite possible that growth expectations may have been unreasonable in the past.
It's fair to say that the share price does not seem to be reflecting the EPS growth. So it's well worth checking out some other metrics, too.
Meta Platforms' revenue is actually up 27% over the last year. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Meta Platforms is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
We regret to report that Meta Platforms shareholders are down 52% for the year. Unfortunately, that's worse than the broader market decline of 21%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 1.0% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for Meta Platforms you should be aware of.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
