Why Meta Platforms Stock Ticked Higher on Tuesday

Written by on December 8, 2021

What occurred

Shares of Fb mother or father Meta Platforms ( FB 1.55% ) rose as a lot as 2.7% on Tuesday. On the shut, the inventory was up about 1.6%.

The tech inventory’s acquire was possible primarily pushed by an upbeat day within the total inventory market, particularly for tech shares.

Meta Platforms CEO Mark Zuckerberg. Picture supply: Meta Platforms.

So what

Capturing the optimism available in the market on Tuesday, the S&P 500 was up 2% on the shut and the tech-heavy Nasdaq Composite gained 3%.

It wasn’t shocking to see tech shares gaining greater than the general market on Tuesday. Many techs offered off sharply final week as traders had been spooked by information of the Fed’s commentary on probably accelerating a plan for rate of interest hikes and the arrival of a brand new coronavirus variant. Maybe the market has deemed the omicron coronavirus variant to be not as huge of a menace to the economic system as some individuals had initially thought. As well as, the market might imagine that some tech shares are undervalued, even in an setting the place rates of interest might enhance.

Now what

Meta Platforms inventory has had a tough few months. Even together with the inventory’s acquire right this moment, shares are down 14% over the previous three months. Traders ought to look previous near-term headlines and concentrate on a inventory’s valuation relative to their evaluation of the underlying enterprise’ long-term potential.

With Meta shares buying and selling at simply 23 occasions earnings, the market appears to already be pricing in numerous uncertainty. This valuation is especially enticing contemplating that analysts count on Meta’s earnings per share to develop at a median annualized price of 21% over the subsequent 5 years.

This text represents the opinion of the author, who might disagree with the “official” advice place of a Motley Idiot premium advisory service. We’re motley! Questioning an investing thesis – even one in every of our personal – helps us all suppose critically about investing and make choices that assist us turn out to be smarter, happier, and richer.

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