Is Meta Still a Buy After Apple’s Vision Pro Launch?

Key Points

• Meta has actually outperformed Apple this year.
• The turnaround story is real and continuing to gain momentum. 
• There are key catalysts on the horizon that could catapult Meta to all-time highs. 

Having endured not a small amount of ridicule for their pivot towards, and investment in, the metaverse, Meta Inc NASDAQ: META has had to watch Apple Inc NASDAQ: AAPL take its first step in that direction to immediate acclaim. The latter’s launch last week of their mixed reality headset, named the Vision Pro, couldn’t have gone any better in terms of industry feedback and stock reaction.

In fact, it was so good that Apple shares notched a fresh all-time high. This was their first since January 2022, and it caps a stunning comeback which has Apple being the first major tech company to completely reverse and undo the damage of the past 1-2 years. 

So for those of us with an interest in or a soft spot for Meta, does this mean we should be switching allegiances? We here at MarketBeat think not. While Apple is clearly onto a good thing right now, there’s a ton of upside still to be realized in Meta shares that makes them a compelling buy. Let’s take a look at some of the reasons why. 

Meta Year Of Efficiency 

In what was one of the more brutal sell-offs among all the tech titans, Meta shares dropped more than 75% in a year or so through last October. Plummeting ad revenue and decelerating engagement were just two key metrics that sent them at one point back to 2015 levels. But like any company worth its salt, Zuckerberg and Co used this wake-up call to make Meta leaner and more primed for growth than ever before.

It didn’t make for pretty reading, but laying off around 20,000 employees has had a tangible effect already on their operational efficiency. It was felt at one point that the company had become bloated and was operating at only half its potential effectiveness. Considering how shares have performed amidst the layoffs in recent months, it’s clear investors are buying into the efficiency targets. 

Meta shares are up an astounding 200% since November, with most of those gains coming since January. In fact, over that time frame, they’ve outperformed both the S&P 500 index (up 14%) and Apple (up 47%), showing just how potent an effect the company’s changes have had. 

Additional headwinds that spooked investors and weighed on the stock last year have almost been addressed and, for the most part, have run their course. These include Apple’s ad tracking changes, adverse FX moves, and its Reel monetization plans. The team over at Loop Capital felt these three factors alone added up to a mid-teens percentage headwind to revenue growth last year, and with them mostly dissipated now, they have a hefty price target of $320 for Meta stock. Even with the strong first half of the year that Meta shares have enjoyed, that’s still pointing to an additional upside of about 20% from where shares closed last night. 

Meta Turnaround Story

Additional tailwinds are appearing in the form of the company’s use of AI, which will improve user engagement and, ultimately, monetization. There’s also the fact that with inflation readings continuing to cool, spending-related pressures which hurt their ad revenue are also being lifted, so investors are looking for improved numbers in that regard in the coming quarters. There’s a real sense that Meta has weathered the worst of it and is starting to come out the other side.  

The company will be launching fresh hardware in the fall that will compete more closely with Apple’s Vision Pro, and the market’s feedback on this will be a critical turning point. In the meantime, though, Meta has done everything the market has asked of them, with KeyBanc and Morgan Stanley also weighing in from the bull’s corner in recent months in light of their drive for efficiency. There’s a little more than a month to go before Meta’s next earnings report. We expect shares to continue gaining momentum in the meantime. If the numbers from that confirm the turnaround story that we expect is happening, then Meta could quickly become the second big tech titan to once again be hitting fresh all-time highs.