Meta Platforms, Inc. (META) is Attracting Investor Attention: Here is What You Should Know

Meta Platforms (META) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.

Over the past month, shares of this social media company have returned -12.9%, compared to the Zacks S&P 500 composite's -9.9% change. During this period, the Zacks Internet - Software industry, which Meta Platforms falls in, has lost 14.7%. The key question now is: What could be the stock's future direction?

Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.

Revisions to Earnings Estimates

Here at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.

We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

Meta Platforms is expected to post earnings of $1.84 per share for the current quarter, representing a year-over-year change of -42.9%. Over the last 30 days, the Zacks Consensus Estimate has changed +6.3%.

For the current fiscal year, the consensus earnings estimate of $9.55 points to a change of -30.7% from the prior year. Over the last 30 days, this estimate has changed +3.4%.

For the next fiscal year, the consensus earnings estimate of $10.76 indicates a change of +12.7% from what Meta Platforms is expected to report a year ago. Over the past month, the estimate has changed -3.5%.

Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Meta Platforms is rated Zacks Rank #4 (Sell).

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Revenue Growth Forecast