Meta puts the F in FAANG. Wait, what?
Meta Platforms Inc., formerly known as Facebook, Inc., is the parent company of Facebook, Instagram, WhatsApp, Oculus and many other uber-popular technology brands. It’s one of the most high-profile tech companies in the world, alongside Amazon, Apple, Netflix and Google — hence the acronym FAANG. (MAANG has a little less bite.)
In May 2012, the Menlo Park, California-based social media platform launched its IPO, which was marred by technical glitches. The stock’s price plummeted, closing at an all-time low of $17.73 later that year, and it took 16 months for shares to return to the initial offering price of $42.
In many ways, this is the story of Meta.
More recently, Meta’s stock price hit an all-time high in September 2021, closing at $382. Then came February 3, 2022, a day many investors will remember for years to come. For the first time ever, Facebook had just reported a loss of active users, and its share price plummeted, wiping out more than $250 billion in market value in one day — the largest single-day loss in market history.
Suffice it to say, Meta’s stock price has gone through some major swings. You might be wondering, how much is Facebook stock now? In the spring of 2022, shares have traded around $228. It’s also worth noting at the outset that Meta doesn’t pay dividends. So does it deserve a spot in your portfolio? (If so, you can buy it through any of the best online stock trading platforms.) Here’s how to find out.
Facebook stock (FB) fundamentals
Since Mark Zuckerberg co-founded Facebook (now Meta) in 2004 along with several of his Harvard University classmates, the company has become an integral part of the daily lives of nearly two billion people around the world. Meta has played a major role in shaping social media, society and perhaps even democracy itself. As its new name implies, Meta is now focused on the metaverse, which Zuckerberg describes as “the next frontier” of the internet.
What form the metaverse will take isn’t exactly clear yet. Currently, Meta’s plans indicate its version of the metaverse will be focused on the virtual-reality aspect, connecting people in a virtual space through the likely use of virtual-reality goggles and other wearable technology.
Even if you don’t fully understand the metaverse — or social media for that matter — you may still want to buy Facebook stock. As with any stock, before you decide to buy any shares, you should first do your due diligence. In short, that means you should dig into the company’s financials, competition and stock performance.
Facebook aka Meta stock is traded on the Nasdaq exchange under the ticker symbol FB. FB is a class A stock. Just as the company’s name changed, its ticker will too — eventually. The new ticker will be MVRS, in reference to the metaverse, and is expected to go into effect some time in 2022. Meta is currently one of the top 10 components of the S&P 500, which is a U.S. stock market index that tracks the performance of the largest companies in the country.
In terms of Meta’s finances, a good place for beginners to learn more is through its recent earnings reports, which you can access by going to Meta’s investor-relations page on the company's website. The Securities and Exchange Commission (SEC), a federal government agency that regulates markets, also compiles documents on publicly traded companies, including Meta, that anyone can view. These documents will give you a better picture of the business side of Meta.
While Meta’s finances are crucial to understand, how its stock performs and whether it deserves a spot in your portfolio are just as important. To determine this, you should also consider FB’s historical stock performance. You can find this information on financial websites such as Nasdaq, where you can track FB’s stock prices over time and find key metrics like its market capitalization, earnings per share, price-to-earnings aka p/e ratio and more.
Analysts note that Facebook faces growth headwinds, ceding users to trendier social networks, and its stock price has been down since early 2022. But some investors see a buying opportunity in these struggles as Meta gears up for the next phase of the internet: the metaverse. FB’s volatility is another major factor to consider, as its price is bumpier than the average S&P 500 component.
Again, Meta has never paid dividends and has not released plans to do so. This alone may be a deal breaker for income-seeking investors. Whether or not FB deserves a spot in your portfolio depends on your ultimate goals and investment strategy.
Facebook’s (Meta) latest financial results
Meta released its fourth-quarter earnings report in early February 2022.
The company reported healthy revenue growth, beating analyst predictions. It met expectations with 2.9 billion monthly active users — a metric Meta uses to measure Facebook’s global footprint. However, its earnings per share fell short of expectations. Meta reported a fourth-quarter EPS of $3.67, down about 5% from the previous year.
What really rubbed investors the wrong way was a dent in Facebook’s daily active users (DAUs). Meta’s earnings report showed Facebook shed half a million daily active users in the fourth quarter of 2021 — even as Facebook’s DAUs increased 5% year-over-year in December. This quarterly decrease in DAUs was a first for Facebook, suggesting headwinds for the company’s growth amid fierce competition from TikTok and YouTube.
Following this news, Meta’s stock price fell sharply. Meta shares closed at $323 on Feb. 2. The next day, they closed under $238, marking the largest single-day decline in market value in stock market history. FB's price has continued to fall since then. In spring 2022, Meta shares are trading around $228.
Before Meta’s record-setting loss of market value, the price of FB was already seen as volatile when compared to other stocks on the S&P 500. You can get a sense of a stock’s estimated volatility by checking a metric called “beta.” Generally, a beta of 1.0 means that a stock’s volatility is the same as the S&P 500. A beta lower than 1.0 suggests it’s less volatile; and a beta above 1.0 suggests it’s more volatile.
FB’s current beta is 1.39, meaning that the stock is likely more volatile than other stocks on the S&P 500, but note that this number alone is not a full representation of FB’s volatility.
Meta’s next quarterly earnings report is expected in late April.
How Facebook stock fits into your portfolio
Since FB stock is included in the popular S&P 500 and Nasdaq 100 indices, you might already own FB stock if you invest in mutual funds, index funds or exchange-traded funds (ETFs) based on those indices.
For example, if you invest in an S&P 500 index fund, your portfolio gets exposure to all of the companies that make up the S&P 500. That includes Meta stock, yes — but also Apple (AAPL) stock, Amazon (AMZN) stock and Tesla (TLSA) stock too — as well many other non-tech companies such as Costco (COST) and Starbucks (SBUX). Because index funds expose your portfolio to such a broad swath of the market, they’re generally seen as an easy and cost-effective way to diversify your investments.
Meta stock is also a holding in more than 300 ETFs, which are a type of index fund that offers intra-day trading. Owning stock through a traditional index fund or ETF is generally regarded as a safer bet than investing in an individual stock because your portfolio will include a broader basket of stocks, and diversification can help your portfolio weather rough markets. That said, it is cheaper and easier than ever to buy individual stocks through online brokerages.
As with any stock, investing in Meta comes with risks. As its beta of 1.39 suggests, FB is more volatile than other S&P 500 stocks and even several other FAANG or FAAMG stocks (which swaps out Netflix for Microsoft). Its recent double-digit decline is all the more reason to proceed with caution.
How to buy Facebook in a brokerage account
Using a brokerage account is an easy way to directly buy shares of FB stock, but don’t rush into the decision simply because it’s easy.
If you’re a novice investor, make sure you have a solid financial foundation first:
- Set up an emergency fund.
- Pay down high-interest debt.
- Take advantage of retirement benefits from your employer, like matching 401(k) contributions.
- Build a diversified portfolio (by investing in mutual funds, index funds or ETFs, for example).
Once those bases are covered, you can decide whether you want to buy individual shares of FB stock through a brokerage account.
Brokerage accounts have opened up investing to a new audience of everyday folks, who are often referred to by the industry as retail investors. Schwab and E*Trade pioneered the concept in the ‘90s but more recently, Robinhood and Webull have taken retail investing to another level with their simplified apps that boast zero-commission trades.
Many of the best online stock trading platforms now offer low or zero-commission trades as well. Money’s picks for top brokerages include Fidelity, Betterment, E*Trade, Charles Schwab, Webull, and Vanguard. While all are recommended, each has its own niche.
Depending on the brokerage account you choose, you may be able to buy FB stock with zero-commission fees — likely from your computer or smartphone. You may also be able to buy “fractional shares” of FB stock. What this means is that instead of buying an entire share of FB stock, you can buy a portion of a share for $1, $5 or any amount you choose, should your broker allow it.
Brokers also let you invest in index funds, ETFs (and some, even cryptocurrency). Remember, buying FB stock through an index fund reduces the risk associated with only purchasing a single company’s stock.
Bottom line: Let Meta’s recent double-digit decline serve as a reminder. Even the biggest and most futuristic companies can face major setbacks and carry risks for investors. Likewise, even if you’ve done your research and have come to the conclusion that the metaverse is the future and Meta’s stock will launch a major comeback, ensure your investments are diversified and limit your exposure to any one company’s stock. Learn more about how to buy stocks here.