Stock Plunge Pushes Meta Platforms (META) Into Buy-The-Dip Territory

Globe and Mail

04-04-2025

Shares of Meta Platforms (META) were down nearly 9% yesterday as the market sold off dramatically due to the tariff turmoil coming out of Washington, D.C. With yesterday's plunge, shares of the social media giant are now down nearly 30% from their 52-week high, giving investors a 'magnificent' opportunity to buy this dominant, blue-chip Mag 7 stock at a discount price.
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I'm bullish on Meta Platforms based on its valuation relative to the broader market and its magnificent seven peers, returns to shareholders, revenue and user growth, and track record of long-term performance. Furthermore, Wall Street analysts rate shares of the Menlo Park-based company a Strong Buy and forecast a potential upside of over 40% over the next year, further highlighting the attractive opportunity available to long-term investors here.
Magnificent Seven Valuation
The magnificent seven stocks, and tech stocks more broadly, have come under scrutiny for their elevated valuations. But at this point, Meta is hardly expensive, and one can even make the case that it's a value stock. Following the selloff, shares trade for an undemanding 21x consensus 2025 earnings estimates, roughly in line with the broader market, with the S&P 500 trading for 21.5 times 2025 times analyst earnings estimates.
A lot can happen between now and next year, especially given the volatility in the market and the broader economy. However, Meta Platforms look even cheaper looking ahead another year, with shares trading at just 18.3x 2026 analyst earnings estimates.
Not only is META stock trading at a negligible premium to the broader market, but it is also cheaper than many of its magnificent seven peers. For example, Apple (AAPL) and Microsoft (MSFT) trade for 27.9x and 28.3x 2025 earnings, respectively, while Amazon trades for a similar 28.2x 2025 earnings.
Meta is roughly in line with Nvidia (NVDA) (22x NTM earnings) and trades at a premium to Alphabet (GOOGL) (16.8x 2025 earnings), both of which I am also bullish on. Meta is also significantly cheaper than Tesla (TSLA), which trades for over 100x 2025 earnings estimates, although at this point,t Tesla is clearly a bit of an outlier.
During the market correction, all the magnificent seven stocks, except Tesla, have become significantly cheaper and more attractive. However, Meta Platforms is still among the most affordable, making it an attractive opportunity to buy this blue-chip magnificent seven company.
META's Growing Returns to Shareholders
Meta is also burnishing its newfound appeal as a value stock by returning capital to shareholders. As of 2024, Meta is still a newly minted dividend stock. Admittedly, its yield of 0.4% today isn't much to write home about, but Meta has a lot of potential as a dividend growth stock that could be paying a much higher dividend in the future than today. The company has already increased its quarterly payout from $0.50 a share in 2024 to $0.525 this year. Plus, it features a miniscule payout ratio, meaning that there is plenty of room to continue to increase these dividend payouts over time.
Beyond the dividend, Meta is also significantly using share buybacks to return value to shareholders. Last year, t he company bought back an incredible $40 billion worth of shares, trailing only Apple in terms of the total value of these buybacks.
Share repurchases can be accretive to shareholders because they decrease a company's share count over time and thus increase earnings per share. As discussed above, Meta shares are inexpensive right now, and Meta has plenty of cash, so I would expect the company to continue buying back shares in 2025.
Meta is Huge and Still Growing
Meta is one of the world's largest companies but still growing. Revenue grew by 22% in 2024, which is quite impressive for a company of its size and scale. Over the long term, the company has demonstrated massive revenue growth—its 2024 revenue of $164.5 billion was more than double its revenue of $70.7 billion generated five years ago in 2019 and nearly triple its revenue of $55.8 billion recorded six years ago in 2018.
It might feel like Facebook and Instagram have been around forever, and everyone already has them. However, the company still increased daily active users by 5% during Q4 of 2024, which is no small feat given how ubiquitous the platforms already are.
Is Meta Platforms a Good Stock to Buy?
Turning to Wall Street, META earns a Strong Buy consensus rating based on 44 Buys, three Holds, and one Sell rating assigned in the past three months. The average analyst META stock price target of $761.49 implies a 48.6% upside potential from current levels.
Meta Stock Looks Like a Fast Pitch
Every now and then, the market throws investors a fast pitch that they can take a big swing at and knock out of the park, and right now, Meta looks like one of those rare opportunities.
I'm bullish on Meta Platforms stock based on its cheap valuation, and continued impressive growth in revenue and users while, importantly, not forgetting to give back to shareholders. Sell-side analysts rate the stock a Strong Buy and forecast a potential upside of almost 50% over the next year, further underscoring the attractive opportunity.