Many investors also do technical analysis of a stock, which means analyzing historical movements in the stock’s price to attempt to predict future movements. If you want to go this route, we have detailed overviews of how to research stocks and how to read stock charts, including key terms to know. Beyond your own personal risk tolerance and how long you plan to invest, strategic investors do significant research into a company before buying its stock. They perform fundamental analysis, which involves looking at the company’s financial statements and considering how economic factors might influence the stock’s future performance. For years, Meta Platforms (META -2.92%) had one of the strongest business models on the stock market.
- But even prior to that, Meta was already a hot stock for many investors and has been for some time.
- Meta Platforms could be an exciting stock to own for the long term.
- Institutional investors want to avoid paying above a certain price and will wait for the price to drift back down.
The fact that picking stocks is so difficult leads many investors to turn to index mutual funds and exchange-traded funds, which bundle many stocks together. This data, which comes from New Constructs, measures how ROIC compares to Meta’s weighted average cost of capital (WACC). New Constructs defines ROIC as net operating profit after taxes divided by average invested capital. As you can see from the chart above, Meta’s return on invested capital (ROIC) has fallen sharply since 2021, when its advertising business was still booming.
Meta Platforms’ stock is on track to benefit from a couple of solid catalysts.
Read on to discover our picks for the best metaverse stocks to buy now. Last week, Meta Platforms took its first leap into the metaverse via its public launch of Horizon Worlds to adults in the U.S. and Canada. Horizon Worlds is a free social VR platform in which users equipped with the company’s Oculus Quest 2 VR headsets can interact. Securities & Exchange Commission (SEC), Wall Street Journal, New York Times, CBS “60 Minutes,” and other organizations to show what she says are deep flaws at the giant social network.
To help lay the foundation for the metaverse, developers are using Autodesk’s software to create virtual worlds. Autodesk has embraced this trend, setting up a line of software designed specifically for the virtual world. This year, it took two significant initiatives that relate to the possibilities of metaverse commerce. The positive aspects of Unity make the stock a good long-term investment. While some investors are concerned about Unity’s present difficulties, they are only anticipated to last a short while. To develop its platform, the management team is resolving the technological problems and using the knowledge obtained from the experience.
Digital ad spending is picking up
The current concept of this word is still evolving, so don’t concern yourself if it’s fuzzy to you. Two billion people log into their Facebook accounts each day; almost 3 billion actively use the platform every month, making it the biggest social media site in the world. Meta’s heavy bet on this segment, on one hand, looks perfectly rational. Envisioned as a vast, interconnected digital universe, the metaverse holds the potential to revolutionize how we work, socialize, learn, and entertain ourselves. As this virtual world develops, it will open up huge opportunities that we haven’t seen before.
Due diligence can include different forms of analysis, the most basic being fundamental analysis and technical analysis. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Alphabet, Apple, and Meta Platforms. Compared to most earlier-stage metaverse businesses, Meta is in an advantageous position.
In other words, investors are not getting any advantage in terms of valuation. They must be willing to pay for the premium to own the stock today. Webull is a free online stock trading platform where you can trade metaverse stocks, ETFs, and options commission-free. Webull allows westernfx review you to buy/sell over 3,000+ US stocks and futures, forex, and market indices. That is, the computer gaming and tech giant provides the tools other companies need to create their own metaverses. Most notable among these tools is its recently launched Omniverse platform.
The company is expected to return to double-digit sales and earnings-per-share growth between now and the end of 2024. Meta is currently selling for 37 times trailing-12-month earnings and roughly fxcm broker review 7 times sales, so the stock is no longer a screaming buy. In the light of this somewhat frothy valuation, it’s perfectly understandable that some investors might want to take a pass.
Snap’s stock price has been on a downward trend, resting 55% lower than last year. Unlike virtual reality, where users are largely oblivious to their physical surroundings, augmented reality empowers them and blends the digital and physical worlds. Snap Inc. controls many of many social media companies in the metaverse, including Snapchat, Spectacles, and Bitmoji. Originally known as Snapchat Inc., the company rebranded itself to Snap Inc. on September 24, 2016, to include the Spectacles product under its name.
Meta’s apps are free to join and use; the company makes money by showing its users advertisements. Of course, marketers are willing to pay more if their ads can be delivered to more people. What makes Meta’s user base even more attractive to advertisers is that people willingly reveal information about themselves, such as age, marital status, favorite movie, etc. This is all information marketers can use to target their advertisements more efficiently.
If the depth exceeds 15%, you may have another type of pattern, such as a cup with handle, cup-without-handle base, or what MarketSmith pattern recognition will simply identify as a consolidation. I was right about Meta Platforms stock being not as good a bet back in December, as it brokerage company hycm lost one-third of its value in just over one quarter. My advice to steer clear of Tencent also proved good, as the stock declined 16.5% over a period in which the Nasdaq Composite fell “only” 6.4%. Subscription streaming services make up a huge part of the entertainment industry.
Several products, such as AutoCAD and Revit, allow engineers, designers, architects, and the like can create virtual designs of products, buildings, and more. Shopify is also developing a new NFT platform, allowing digital producers to directly sell art and other material to customers. This acquisition provides Shopify with an effective tool in the metaverse, allowing members to build up possible storefronts in the digital world. It will be sufficient for Nvidia to surpass the $1 trillion value milestone if it keeps up that growth pace through 2030, providing its steady price-to-sales ratio. Its potential adoption in the enterprise sector, specifically in design, as a real-time simulation will significantly increase engineering productivity.
The firm also reiterates a $650-per-share price target and buy rating on Nvidia shares. What’s more, AI tools like these lower the bar for businesses to start advertising on Facebook and Instagram. While it’s relatively easy for a solopreneur or small-business owner to turn a post into an ad with Meta’s tools, getting value out of Meta’s ad products requires a certain level of skill. These tools can do a lot of the work for you, bringing you up to par quickly, and helping you get value out of ads. In other words, their interests aren’t always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock’s price movement.
Meta’s bet on the metaverse
But Meta is also a massively successful social media and networking company, and it’s making improvements in monetizing those platforms through digital advertising. Tech stocks with “A” ratings from InvestorPlace Portfolio Grader offer a combination of growth potential, financial strength, and innovation that can make them attractive additions to an investor’s portfolio. JPMorgan initiates coverage on Post Holdings (POST) with an overweight rating and $100-per-share price target. The bank says the maker of cereal and pet foods generates strong cash flow that could help it reduce debt and buy back stock over the next two years. Meta shares have performed extremely well for investors in 2023, up more than 160%. Nicholas Rossolillo and his clients have positions in Apple and Meta Platforms.
The good news for Meta investors is that the company seems to be winning market share in digital advertising. The company delivered $31.5 billion in advertising revenue in the second quarter of 2023, a 12% increase over the prior year, which means that it is growing at a faster pace than the digital ad space. Meta Platforms has an excellent business, and with its investment in the metaverse, the potential for revenue growth long into the next decade.
That article highlighted the basics of the Roundhill Ball Metaverse ETF (METV -1.94%), listed the fund’s top 10 holdings, and included what I viewed as the best stocks in the top 10 group and the ones to avoid. In simple terms, the metaverse can be thought of as a melding of the physical and virtual worlds. For investors, what’s key to keep in mind is that the metaverse has the potential to be the next evolution of the internet.
Fundamentally, investors should research the company’s financials. Financial sites like our own Investopedia also offer exceptionally useful company-specific information. Buyers at the lows on the stock’s worst days are likely to be aware of the problems causing the decline, and to be counting on scooping up a bargain amid bearish sentiment. Some will arrive at that judgement only after a careful analysis of the company’s prospects.