Social media stocks have been changing as competition with Amazon and TikTok intensifies. The Meta (NASDAQ: META) stock price has dived by over 40% from its all-time high, while Twitter is a shadow of its former self. The same is true with companies like Snap, Bumble, and Match. So, does the collapse of the FB stock price make it a good buy?
Meta Platforms is battling multiple battles at the same time. First, the company is dealing with the overall decline of ad revenue because of the Apple iOS update. The update lets users select whether or not to be tracked. Most people preferred the latter. As a result, it has become difficult for many advertisers to target people by age, gender, location, and other small details.
Second, the Meta share price has dropped because of the rising competition from TikTok. The company now has millions of daily active users. And with Facebook ads not having strong returns, many advertisers have flocked to this platform. While Meta has launched Reels, it has struggled to monetize it through advertisements. In a recent feature, WSJ wrote about a company that has slashed its daily marketing budget of $7,000 to less than $2,000.
Third, the FB stock price has also crashed because of the competition from Amazon. Today, Amazon has become one of the biggest advertisers. Its ad business generated over $31 billion in revenue in 2021. So again, like with TikTok, many companies are opting to shift from Meta to the company.
Still, some analysts believe that now is a good time to buy the Meta stock. They point to the fact that the firm has a whole army of developers who will find a way around the iOS limits. Further, they see that the firm’s valuation metrics are cheaper than the S&P 500. Most importantly, the company has a strong role in the metaverse industry.
And Finally, Facebook has emerged from past scandals like the Cambridge Analytica one previously. They expect it to recover from this slump as well.
The Meta share price has been attempting to crawl back after it crashed to a low of $184. However, it is yet to fill the gap that happened when it declined after delivering weak quarterly results. As a result, the stock is forming an island reversal pattern. In price action analysis, this pattern is usually a sign of reversal.
Therefore, while it is too early to tell, there is a likelihood that the FB stock price will rebound. If this happens, it will be towards or after it publishes its quarterly results.
This post was last modified on Mar 25, 2022, 08:17 GMT 08:17