Poor Financials May Provoke Bears to Go Bananas Against META Stock

META Stock

  • Third quarter earnings show degrading company finances.
  • The company shares have lost over half of its value this year.
  • META stock was trading at a market price of $101.47 at the publication time.

Meta Platforms’ Degrading Financials

The year is getting worse for Meta Platforms (NASDAQ:META) as the company was seen struggling with its financials. Poor quarterly earnings sent several blows to META stock price throughout the year. But Mark Zuckerberg is trying to keep the ship afloat in this vast ocean and announced an employment cut of 11,000 employees. The organization also planned to compensate the ones getting fired from their jobs.

The number translates to 13% of the total employees active in the organization. Zuck Bucks said that they will stop hiring until the end of Q1 2023. According to the latest quarterly financials, company expenses have raised significantly during the third quarter this year since Q4 2020. The organization has sent a lion’s share of these expenses in their research and development arm, Reality Labs.

According to the experts Meta has spent over $15 Billion on their research, specifically on the metaverse. Increasing expenses has caused a steep fall in the net income. Earnings Per Share (EPS) has fallen significantly from $3.67 per share in Q1 2021 to $1.64 per share in Q3 2022.

Source: Meta Platforms Q3 Earnings Presentation
Source: Meta Platforms Q3 Earnings Presentation

Company’s free cash flow has reduced by almost 99% from $12.5 Billion in Q4 2021 to just $173 Million in the latest quarterly earnings. The massive difference came due to the decreasing net cash offered by the operating activities and increasing purchases.

Source: Meta Platforms Q3 Earnings Presentation

META Stock Price Action

META stock was trading at the market price of $101.47 at the time of writing, a 58% drop since February 2022. The company traded above $240 levels during the first quarter this year and fell below $200 by the end March. The share started to rise and reached close to its February levels, creating a resistance at that time.

In April 2022, Mark Zuckerberg said that they were planning to implement virtual currencies in their family of apps. Surprisingly, that’s when the price started to fall where the META stock price saw its new support level around $180, but broke the zone in June 2022. Since then, company shares has seen a constant fall in its price.

Mark Zuckerberg holds a long term vision concerning the metaverse or else why would anyone throw such a large pile of money in any sector. But what if the metaverse fails? In that case we can witness a great fall of one of the dominant companies globally or at least a massive decline in the META stock price.

Recently, Intel Corporation (NASDAQ: INTC) announced cost cuts in the organization similar to Meta Platforms as the company targets to save $10 Billion in savings by 2025.

Source: https://www.thecoinrepublic.com/2022/11/10/poor-financials-may-provoke-bears-to-go-bananas-against-meta-stock/