Is Meta Platforms (META) a Smart Long-Term Buy?

Wedgewood Partners, an investment management firm, published its fourth quarter 2022 investor letter – a copy of which can be downloaded here. A quarterly net increase of 5.2% has been recorded by the fund for the fourth quarter of 2022, below the S&P 500 Index’s 7.56% gain for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

In its Q3 2022 investor letter, Wedgewood Partners mentioned Meta Platforms, Inc. (NASDAQ:META) and explained its insights for the company. Founded in 2004, Meta Platforms, Inc. (NASDAQ:META) is a Menlo Park, California-based multinational technology conglomerate with a $357.0 billion market capitalization. Meta Platforms, Inc. (NASDAQ:META) delivered a 13.14% return since the beginning of the year, while its 12-month returns are down by -58.38%. The stock closed at $136.15 per share on January 19, 2023.

Here is what Wedgewood Partners has to say about Meta Platforms, Inc. (NASDAQ:META) in its Q3 2022 investor letter:

Meta Platforms detracted from performance during the quarter and for most of the year. Meta’s advertising revenue grew slightly (currency-adjusted) over 2021 but was up over +60% compared to 2019 (pre-Pandemic). The Company reported 2.9 billion “daily active users (DAUs)” of its Family of Apps (as of September 2022), up nearly +30% from December 2019. Despite these impressive gains, the stock now trades at absolute levels well below where it traded before the Pandemic. Much of the market’s concern revolves around slowing revenue growth and aggressive reinvestment. It is now quite evident that there was a tremendous pull-forward of demand for many businesses and services over the past couple of years. The normalization of revenue growth from that pull-forward is hardly an existential crisis. Further, while Meta’s profit margins have fallen below pre-Pandemic levels, the business likely hired well in excess of what it needed because it assumed the Pandemic induced growth would continue. Meta has plenty of room to moderate its expense base and drive significant value by repurchasing shares at today’s historically depressed multiples.”

Facebook Photo by Alexander Shatov on Unsplash

Our calculations show that Meta Platforms, Inc. (NASDAQ:META) ranks 4th on our list of the 30 Most Popular Stocks Among Hedge Funds. Meta Platforms, Inc. (NASDAQ:META) was in 177 hedge fund portfolios at the end of the second quarter of 2022, compared to 185 funds in the previous quarter. Meta Platforms, Inc. (NASDAQ:META) delivered a 3.51% return in the past 3 months.

In January 2023, we also shared another hedge fund’s views on Meta Platforms, Inc. (NASDAQ:META) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q4 2022 page.

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Disclosure: None. This article is originally published at Insider Monkey.

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