Meta Platforms, formerly known as Facebook, has witnessed a remarkable surge in its stock price this year, soaring by an impressive 127%. However, according to Mark Mahaney, the head of Evercore ISI’s Internet research team, the rally is far from over. Mahaney believes that Meta remains a compelling investment opportunity, as it still appears relatively cheap based on certain valuation metrics, positioning it as the “best play” in the realm of large-cap tech stocks.
In an interview with CNBC, Mahaney highlighted that Meta’s stock is currently trading at 15 times GAAP (Generally Accepted Accounting Principles) earnings, making it an attractively priced option compared to its peers. He emphasized Meta’s status as a high-quality tech stock, suggesting that its valuation multiples have been de-risked due to the challenges faced by the tech sector in the previous year, including lower multiples and reduced estimates resulting from workforce reductions (RIFs).
Mahaney expressed confidence in Meta’s ability to sustain its upward momentum, pointing to favorable “product cycles” that are expected to drive revenue growth. Additionally, the company’s cost-cutting initiatives are predicted to enhance profit margins. With these factors in mind, Mahaney believes there is significant upside potential for Meta’s stock, bolstering his conviction that it is an appealing investment opportunity.
The broader tech sector has experienced a resurgence in investor interest this year, outperforming previous expectations after a challenging 2022. This renewed enthusiasm can be attributed to the growing excitement around artificial intelligence and the anticipation that the Federal Reserve will soon conclude its aggressive interest-rate increases.
In conclusion, Mark Mahaney’s analysis suggests that Meta Platforms offers an enticing investment prospect in the tech industry. Despite the stock’s substantial rally this year, its current valuation metrics, along with anticipated revenue growth and cost-cutting measures, contribute to its favorable outlook. As tech stocks continue to regain their footing and benefit from improving investor sentiment, Meta appears poised for further success in the market.