Meta Platforms(NASDAQ: META) stock suffered a peak-to-trough decline of 76% between September 2021 and October 2022, bottoming at around $90. Meta is the parent of social media platforms Facebook, Instagram, and WhatsApp, but CEO Mark Zuckerberg pivoted the company toward the metaverse in 2021. The shift eroded Meta's profitability because of the metaverse's high capital costs and negligible revenue.
Following the plunge in stock price, Zuckerberg heeded investors' complaints and dubbed 2023 the "year of efficiency." He slashed more than 21,000 jobs and committed to slow spending on the metaverse in favor of focusing more on artificial intelligence (AI) and the company's core social platforms.
The chart below displays the incredible improvement in Meta's quarterly net income since 2022. In the recent fourth quarter of 2023, it soared by a whopping 201% year over year, to $14 billion.
It's no surprise Meta stock has soared 547% from its October 2022 low to $497, which is near an all-time high.
But Meta stock could still be cheap
Per the above chart, Meta's net income totaled $39.1 billion in 2023. That translated to $14.87 in earnings per share, and based on its current stock price of $497.09, Meta trades at a price-to-earnings (P/E) ratio of 33.4.
That's roughly in line with the 32.9 P/E ratio of the Nasdaq-100 index, implying that Meta stock is fairly valued. However, Wall Street believes the company will grow its earnings by 22.4% in 2024, meaning the stock might look undervalued by the end of the year if it remains at the current price.
Therefore, Meta stock still looks like a great value despite its impressive 547% gain since October 2022.
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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. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.
