Meta, previously known as Facebook, is a widely recognized public company with more than 2.89 billion users worldwide on its social media platform. It raked in over $29 billion in revenue during the second quarter of 2021, making it a popular choice for investors.
The stock price of Meta was around $341 as of November 2021, a significant rise from approximately $120 at the beginning of 2017.
Investing in Meta stock might attract you if you seek a high-growth company or admire its social media platform. It's a commonly traded stock, so purchasing or selling shares is easily accessible through major online discount brokerages like Charles Schwab, E*Trade, Fidelity, or TD Ameritrade. However, it's essential to note that this stock might not suit every investor.
It's impossible to predict whether a stock will rise or fall. Nevertheless, it's crucial to be aware of certain factors before committing your money to investments.
As of August 2021, a single share of Meta stock was trading around $360, which is quite a substantial amount for one share.
However, the stock's price doesn't necessarily mean it's too expensive. Experienced traders consider a company's share price in relation to its earnings. They use a metric called the price-to-earnings (P/E) ratio, found by dividing the company's earnings per share by its stock price.
As of November 2021, Meta's P/E ratio was about 24. Many tech companies have higher P/E ratios (above 20) because there's an anticipation of strong growth. While Meta's P/E ratio is on the higher side, it's not extremely high. For comparison, as of November 2021, Apple had a P/E ratio of about 26, Alphabet's was around 28, and Amazon's P/E ratio was approximately 68.
Meta, previously known as Facebook, is a widely recognized public company with more than 2.89 billion users worldwide on its social media platform. It raked in over $29 billion in revenue during the second quarter of 2021, making it a popular choice for investors.
The stock price of Meta was around $341 as of November 2021, a significant rise from approximately $120 at the beginning of 2017.
Investing in Meta stock might attract you if you seek a high-growth company or admire its social media platform. It's a commonly traded stock, so purchasing or selling shares is easily accessible through major online discount brokerages like Charles Schwab, E*Trade, Fidelity, or TD Ameritrade. However, it's essential to note that this stock might not suit every investor.
It's impossible to predict whether a stock will rise or fall. Nevertheless, it's crucial to be aware of certain factors before committing your money to investments.
Fluctuations in prices, known as volatility, aren't necessarily negative, but not all traders feel comfortable with constant ups and downs.
If you decide to invest in Meta, it might be wise to avoid checking the daily price changes and worrying about short-term profits.
Initially, Facebook faced challenges when it went public in 2012. Despite high expectations, technical issues affected some orders, and the stock, starting at $38, increased by just 23 cents on its first day, May 18, 2012. Shares then dropped to below $30 for several months. It took over a year before investors began to see significant gains.
Meta, as a growth-focused company, aims to expand rapidly and increase its revenue and profits each quarter. However, it reinvests all its profits back into the company to fuel further growth. Consequently, it doesn't pay dividends to its shareholders.
Investors in Meta should understand that their money is being reinvested into the company to drive future growth, potentially increasing the value of their shares. As a result, Meta shares may not provide immediate passive income.
Deciding whether sacrificing immediate income for the promise of faster growth is a wise choice depends on your financial objectives and investment timeline. If you're in it for the long term and aiming for growth, being comfortable with a stock like Meta that doesn't offer dividends might be suitable. But if you seek regular income from your investments, you might consider other stocks that pay dividends unless you're satisfied with slower growth.
You might already have a stake in Meta without realizing it if you own shares in a mutual fund or exchange-traded fund (ETF), particularly those tracking the S&P 500 or the overall stock market.
As one of the world's top 10 companies by market value, Meta is a significant holding in most major mutual funds. For instance, the Vanguard 500 Index Fund (VFIAX), which follows the S&P 500, invests approximately 2% of its portfolio in Meta. Similarly, the iShares Core S&P Total U.S. Stock Market allocates around 1.64% of its assets to Meta. Moreover, various tech-focused funds and ETFs may have even higher exposure to Meta in their holdings.
Investing in mutual funds and ETFs is a way to put money into Meta without directly facing the risks associated with holding its volatile stock.
Meta, a significant corporation with billions of users, has achieved substantial revenue and profitability since its 2012 IPO, benefiting many investors. Nevertheless, there have been periods where its stock performance was subpar. Recognized as a volatile stock, investing in Meta requires readiness to handle fluctuations in its share price.
Note: The information provided does not offer tax, investment, or financial services or advice. It is shared without considering specific investor objectives, risk tolerance, or financial circumstances, and may not suit all investors. Past performance does not guarantee future results. Investing carries risks, including potential loss of invested capital.
