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Meta’s Q3 Earnings Beat—Is This Dip a Golden Entry Opportunity?

LONDON, UK - October 2021: Facebook social media company changes its corporate name to Meta.

Key Points

  • Meta beat Q3 earnings estimates with strong growth metrics, but shares sold off. 
  • However, analysts are exceedingly bullish, as are their price targets.
  • The dip offers up 2 interesting plays for investors. 
  • 5 stocks we like better than Meta Platforms.

Meta Platforms Inc. NASDAQ: META has, for the most part, enjoyed a stellar year. Shares of the tech titan have been building on a 550% rally that has been underway since October 2022, and there are several reasons to be excited about them heading into next year.

Meta Platforms Today

Meta Platforms, Inc. stock logo
METAMETA 90-day performance
Meta Platforms
$623.77 +14.84 (+2.44%)
(As of 12/6/2024 ET)
52-Week Range
$317.77
$629.79
Dividend Yield
0.32%
P/E Ratio
29.38
Price Target
$634.71

Yet, after posting robust Q3 earnings on Wednesday evening, Meta shares finished down more than 4% in yesterday's session. Headquartered in Menlo Park, California, Meta is, without a doubt, one of the strongest players in the tech space right now. 

Their ongoing work in AI and next-gen technology positions them uniquely among peers, and this has been reflected in their share price for over two years now. But with this week's dip in post-earnings, how should investors think about it heading into the rest of the year? Let's jump in and take a look at two trades that are opening up. 

Meta's Fundamental Performance

To start with, we'll take a look at the big takeaways from this week's report. On the face of it, Meta smashed analyst expectations for both EPS and revenue, with the latter figure jumping more than 19% year on year. As CEO Mark Zuckerberg noted, "We had a good quarter driven by AI progress across our apps and business. We also have strong momentum with Meta AI, Llama adoption, and AI-powered glasses."

Daily active people on Meta's platforms, always a key metric for them, grew 5% to nearly 3.3 billion per day, beating estimates. While ad impressions somewhat lagged expectations, the average price per ad outperformed.

Bullish Analyst Updates: Golden Entry Opportunity?

Meta Platforms MarketRank™ Stock Analysis

Overall MarketRank™
82nd Percentile
Analyst Rating
Moderate Buy
Upside/Downside
1.9% Upside
Short Interest Level
Healthy
Dividend Strength
Weak
Environmental Score
N/A
News Sentiment
1.15mentions of Meta Platforms in the last 14 days
Insider Trading
Selling Shares
Proj. Earnings Growth
10.98%
See Full Analysis

For investors who like buying into strong fundamentals, there was a lot to like in Meta's report, and this was built on by analyst updates. 

One idea for getting involved is to treat yesterday's dip as a golden entry opportunity, especially as multiple updates in the past few days suggest Meta shares are primed for further gains. The teams at Citigroup, JMP Securities, UBS Group, and Susquehanna all reiterated Buy ratings following the report, with price targets landing as high as $719. From the $568 that Meta shares closed out Thursday, this is implying a solid 30% upside. 

Potential Concerns

Yet, at the same time, some caution is justified, especially given the cautious outlook of broader tech. Amazon.com Inc's NASDAQ: AMZN 81% capital expenditure jump, paired with Meta's own increased spending, has spooked some investors as it could be years before these companies see the payoff. For context, Meta's capital expenditures are projected to be close to $40 billion for 2024, an increase on previous guidance, with continued spending growth likely in 2025.

This played a large role in the update from the Needham & Company team, who issued a fresh Underperform rating on Meta shares as a result. Off the back of this, a second trade to consider, especially for the more cautious investors, is to wait until the middle of the month to see how the market digests all these tech earnings, as well as the U.S. election

If you're a believer in Meta's long-term prospects but also love the idea of a bargain, this probably isn't a bad way to go about it. 

Getting Involved

Either way, Meta shares are at an interesting place right now, with this week's dip making it a very closely watched stock. 

Between earnings growth, analyst support, and the strength of the underlying rally, investors have many reasons to be excited about Meta's upside potential in the coming years. Those with exceptionally bullish outlooks and little patience might want to consider swooping in and taking advantage of this dip, while those who don't mind waiting could well benefit from sitting on their hands for a few more weeks.

→ Urgent warning about AI (From Weiss Ratings) (Ad)

Should you invest $1,000 in Meta Platforms right now?

Before you consider Meta Platforms, you'll want to hear this.

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Sam Quirke
About The Author

Sam Quirke

Contributing Author

Technical Analysis

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Amazon.com (AMZN)
4.8487 of 5 stars
$227.03+2.9%0.09%48.61Moderate Buy$236.20
Meta Platforms (META)
4.083 of 5 stars
$623.77+2.4%0.32%29.38Moderate Buy$634.71
Compare These Stocks  Add These Stocks to My Watchlist 


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