Meta Platforms (META) drops 55% from record high; time to buy?

Key Takeaways:

  • META lost 55% of its value since Sep. 2021.
  • Its correlation with S&P500 and Bitcoin could send Meta Platforms lower.
  • Some experts consider META undervalued, 44% below the "Fair Value"
Meta Platforms, Meta Platforms (META) drops 55% from record high; time to buy?
image from about.fb.com

YEREVAN (CoinChapter.com) – META, the stock of Meta Platforms, formerly known as Facebook, traded at $170 a share ahead of the June 27 price update, trading 55% below its all-time high of $383 in September 2021.

The stock responded with a 10% uptrend to the chief Mark Zuckerberg’s CNBC’s Jim Cramer interview on Wednesday.

The CEO asserted that the metaverse could be a considerable part of the social network operator’s business in the decade’s second half. Moreover, Meta launched a digital clothing store, where users could shop to “personalize” their avatars.

Meta Platforms could drop further with equities and Bitcoin

Meanwhile, META price fluctuations have moved in unison with Bitcoin since mid-Q1 2022.

Furthermore, the wealth optimization platform MacroAxis estimated the META/BTC correlation coefficient at 0.85. The latter measures the degree to which historical prices or returns on Meta Platforms and Bitcoin move together.

The correlation coefficient measures the extent to which returns on Bitcoin are associated (or correlated) with Meta Platforms. Values of the correlation coefficient range from -1 to +1.

clarified the analysis.
Also read: Meta Platforms stock jumps 20% overnight — is FB a value trap?

The bottom is not in

Meta Platforms (META) charted in unison with equities and Bitcoin. Source : TradingView.com
Meta Platforms (META) charted in unison with equities and Bitcoin. Source: TradingView.com

The high correlation between META and BTC possibly stems from Bitcoin’s dependency on the stock market. CoinChapter reported that the alpha crypto has been charting in unison with the S&P500 since Q3 2021.

Also read: Another failed project? Meta to rollout virtual token 'Zuck Bucks.'

Many experts believe that the bottom for the equities market is not here yet, and META could still drop significantly. However, investment research publisher Valuentum calls the stock “the bargain of the century.”

META undervalued, say experts

The platform believes that Meta’s business model will pay off in the long haul, and buying the dip now is a smart strategy.

We don’t think the market is giving Meta enough credit for the sustainable growth behind its diversified advertising business model. Top-line growth ensues as the company builds out the metaverse.

commented Valuentum.
Meta Platforms, Meta Platforms (META) drops 55% from record high; time to buy?

Moreover, the platform estimated that the stock falls 44% short of its “Fair Value.” Thus, it constitutes an attractive investment. Valuentum called META “significantly undervalued based on the discounted cash flow process.”

Meta Platforms risk valueation. Source: Valuentum report
Meta Platforms risk valuation. Source: Valuentum report

Will Meta Platforms recover?

Valuentum also asserted that the market “may not be reasonable by any stretch” to have “punished” shares of Meta so severely. Moreover, whether one is bullish or bearish on the metaverse may not matter.

For practical purposes, our valuation only considers the massive expected costs and capital spending related to its build. But perhaps even our $367 per share fair value estimate is conservative, as one of the most popular technology gifts over the holidays was Meta’s virtual reality headset.

read the report.
Also read: Avoid Coinbase stock at all costs — ex-hedge fund analyst.

Meta Platforms remain dependent on the equities market. Thus, should the stocks plummet further, META is likely to follow. However, some experts have high expectations from the company, given its general business strategy, and deem it “the bargain of the century.”

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Meta Platforms, Meta Platforms (META) drops 55% from record high; time to buy?

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