The stock market may seem like a difficult place right now, with indexes taking new directions from day to day and even from hour to hour. President Donald Trump's tariffs on imports have stoked concern about corporate profits moving forward and the health of the general economy.
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On Monday, Meta will face off against the federal government in a landmark antitrust trial over claims that it illegally squashed competition by buying Instagram and WhatsApp.
The selloff in Meta Platforms' stock represents a buying opportunity due to their large user base and investments in AI and compute infrastructure. Despite reliance on ad revenue, Meta's flexibility and innovative culture mitigate long-term risks. Founder CEO Mark Zuckerberg's willingness to take risks and innovate positions Meta for future growth, supported by his significant voting control.
Meta's core business remains robust, with $52 billion in free cash flow and strong ad pricing power, despite a 30% stock drop. The market undervalues Meta at 20x trailing earnings, ignoring growth in WhatsApp, Threads, and AI, focusing instead on Reality Labs losses. Meta's management is committed to Reality Labs while scaling AI infrastructure, with significant capital returns through buybacks and a new dividend.
Meta's newest Trump-friendly board member is Dina Powell McCormick, who served as an advisor to the president from 2017 until 2018. Last month, she and her husband, the Republican Sen.
Meta Platforms expands its teen accounts with new protections on Instagram, Facebook, and Messenger to give parents more peace of mind and improve teen safety online.
Investors looking for ways to find stocks that are set to beat quarterly earnings estimates should check out the Zacks Earnings ESP.
Meta Platforms (META -6.74%) is the parent company of social networks including Facebook, Instagram, Messenger, and WhatsApp, which serve more than 3.3 billion people every single day. The company is coming off of a spectacular year of earnings growth in 2024, and it's scheduled to report its financial results for the first quarter of 2025 (ended March 31) on April 30.
Meta Platforms, Inc. is attractively priced at $550, with potential rebound to $750, due to limited direct impact from global trade tariffs. The company's significant AI and capex investments are expected to drive substantial revenue growth, with forecasts reaching nearly $265 billion by 2028. Meta's EPS could be significantly boosted by cutting Reality Labs spending, making the stock undervalued at 16x adjusted EPS targets.
With tariff uncertainties remaining, some of yesterday's biggest rebounders are some of today's biggest losers.
Meta Platforms is upgraded back to "Strong Buy" due to its very attractive valuation at the moment. Meta recently started releasing its updated Llama 4 family of models, which is a very important milestone in building the company's moat in the AI era. The business's fair value estimate under a very conservative scenario is $1.63 trillion, indicating a 27% upside potential.