Why Shares of Meta Platforms Fell for the First Time in 20 Days
All good things come to an end eventually. After an incredible streak of gains that spanned nearly three weeks worth of trading days, shares of Meta Platforms (NASDAQ: META) fell 2.8% today for no obvious reason, although there was news about the company.
An incredible run comes to an end
Since Donald Trump won the election on Nov. 5, Meta has been on an incredible run with its stock up over 25% and now approaching a nearly $1.8 trillion market cap. Meta's CEO Mark Zuckerberg has cozied up to Trump, and investors see a clear path to the company actually monetizing its investments in artificial intelligence (AI).
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The company's fourth-quarter earnings reported at the end of January easily beat consensus estimates, and the company's AI chatbot added 100 million monthly active users from December and now has a total of 700 million. Furthermore, Zuckerberg announced plans to spend $60 billion to $65 billion on AI.
In a blog post published Friday, Meta announced plans to build an underwater cable over 50,000 kilometers in length, longer than the perimeter of the Earth, to support the world's digital infrastructure and expand the potential of AI through high-speed connectivity. Called Project Waterworth, Meta expects the cable to be a multibillion-dollar, multiyear investment.
In other news, the largest pension fund in the Netherlands reportedly sold all of its shares in Meta and Alphabet due to the stocks no longer meeting the fund's investment principals, although CEO Harmen van Wijnen said it had nothing to do with the election of Trump.
Is the stock still a buy?
As I've said previously, I am concerned about elevated valuations in the Magnificent Seven and many AI stocks. I personally prefer to invest elsewhere. However, Meta is the second cheapest name in the Magnificent Seven on a forward earnings basis, and the company has shown more potential to monetize AI than some of its peers, so if you are set on buying these names, Meta is certainly not a bad choice.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Meta Platforms. The Motley Fool has a disclosure policy.
