Meta Platforms Inc (META)

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Summary
Recent Q2 earnings and lower than expected guidance resulted in Facebook shares going down 20%, an overdone reaction.

Management is likely being conservative in their guidance with investors being especially harsh to shares over the past few months.

Good case valuation assumes historical average earnings multiples with significant room for Facebook to run.

Bad case valuation assumes all fundamentals deteriorate and Facebook begins to trade at legacy tech company multiples.

Almost every investor knows about the origins of Facebook (FB) and the story of Mark Zuckerberg. However, after reporting a weaker than expected Q2 earnings and softer outlook, investors were quick to pull money off the table as FB shares plummeted 20%. Though growth appears to be decelerating at a quicker pace than expected with expenses rising faster than revenues, this pullback in FB presents a great opportunity for investor to jump in on the name.

Just earlier this year, FB was caught up in the Cambridge Analytica debacle which ultimately led Zuckerberg to speak in front of the US Courts. During this period, FB stock saw a near 20% decline as investor were fearful of user growth and potential red flags stemming from user privacy concerns. However, over the next few weeks, FB fully recovered and was actually up over 15% from pre-Cambridge news. This Q2 earnings pullback presents a very similar opportunity for investors to build their position as FB now trades much more in line with legacy technology companies and still has significant room to run.