Nasdaq FB FaceBook

WhatsApp, the messaging app of Meta Platforms (FB), is allowing a limited number of people in the U.S. to send and receive money, within a chat using cryptocurrency.

The cryptocurrency payment offering is powered by Novi, the company’s digital wallet. Meanwhile, FB shares fell 0.22% to close at $329.82 on December 9.

Meta Platforms is a U.S. company that develops applications, which allow people to connect with family and friends through mobile devices, personal computers, and other devices.

WhatsApp Payments

A limited number of people can make payments using the Pax cryptocurrency, which is a stablecoin pegged to the U.S. dollar. Novi will convert all the money deposited in a Novi account into Pax Dollars (USDP) to facilitate payment between users. (See Top Smart Score Stocks on TipRanks)

According to Novi’s website, sending payment on a WhatsApp chat is as simple as sending any other attachment on the messaging app. The payment feature can be accessed on both iOS and Android devices. Currently, there are no fees for sending or receiving money. There are also no limits on the number of times one can send or receive payments.

According to a Verge report, the new payment system is well-rooted in Meta Platforms’ cryptocurrency plans launched in 2019. As part of a collaboration with Libra, the tech giant affirmed plans to develop and launch a cryptocurrency pegged to a basket of low volatility assets.

Additionally, this is not the first time WhatsApp has made it possible for people to send and receive money. The Meta app currently offers payments using traditional fiat currencies in some parts of the world. It has already enabled the service in India and Brazil.

Stock Rating

Last week, UBS analyst Lloyd Walmsley reiterated a Buy rating on the stock and raised the price target to $425 from $416 (28.86% upside potential to current levels). According to the analyst, the company is well-positioned to benefit from the better operating performance and multiple expansions.

Consensus among analysts is a Strong Buy based on 29 Buys, and 6 Holds. The average Meta price target of $406.31 implies 23.19% upside potential to current levels.

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Meta Platforms (FB) – formerly known as Facebook – is an American social networking service and social media platform founded in 2004.

I am bullish on Meta Platforms as its strong backing from Wall Street, growth momentum, and competitive strengths add to the attractive valuation to make it look like it might be a good time to buy. (See Analysts' Top Stocks on TipRanks)

Strengths

By 2020, Meta Platforms' Facebook platform had 2.8 billion active users and was ranked seventh in global internet use. It is also the most downloaded mobile app of the 2010s. It now has about 2.9 billion users and is still growing.

Facebook is accessible from any device with internet connectivity, including computers, tablets, phones, etc. Users can create profiles and share text or multimedia posts that are shared with 'friends' – other users they are connected to. Users can also communicate directly through Messenger or groups with other members of common interest.

Recent Results

Meta Platforms reported revenue of $29 billion in the third quarter 2021, with a large part of this coming from advertising. This showed an increase of about 35.5% compared to the same quarter last year.

Total earnings per share were at $3.22 in comparison to last year's $2.71, at a 19% increase.

Daily active users for the quarter were at 1.93 billion, which shows a year-over-year increase of 6%. Meanwhile, monthly active users were 2.91 billion, also up 6%.

Capital expenditures were at $4.54 billion for the quarter, which included principal payments for finance leases. The company repurchased $14.37 billion worth of class A shares and announced a $50 billion increase in share repurchase authorization.

Cash & cash equivalents and other marketable securities on hand were valued at $58.08 billion. The company currently employs 68,177 people, which shows an increase of 20% since the previous year.

Starting with the fourth quarter of 2021, the company plans to break out Facebook Reality Labs as its own segment and dedicate resources to products and services that use virtual and augmented reality.

Total revenue for the fourth quarter is expected to be within the range of $31.5-34 billion. The company faces uncertainty around revenues due to the changes in Apple's iOS, as well as COVID-19 and macroeconomic factors.

Total expenses for 2021 are expected to be within the range of $70-71 billion, with this number increasing significantly for the next year as investments in technical and product talent increase.

Valuation Metrics

Meta's stock looks attractively valued right now as its forward EV/EBITDA multiple of 13.4x and forward price-to-normalized earnings ratio of 24.3x are both below the company's five-year averages of 13.9x and 25.2x, respectively.

Furthermore, the company enjoys a strong growth outlook, with EBITDA expected to grow by 40% in 2021 and 5.8% in 2022. Additionally, normalized EPS is expected to grow by 38.2% in 2021 and 3.3% in 2022.

Wall Street's Take

Turning to Wall Street, Meta Platforms earns a Strong Buy consensus rating based on 29 Buys and six Hold ratings in the past three months. The average Meta Platforms price target of $406.31 implies 22% upside potential.

Summary and Conclusion

Meta Platforms is one of the world's largest and most influential companies as it commands a dominant position in the social media space. It has a pristine balance sheet and solid long-term growth potential. On top of that, the stock is priced relatively inexpensively relative to its historical averages, and Wall Street analysts are overwhelmingly bullish on the stock as well.

As a result, it looks like it might be a good time to add shares.

Disclosure: At the time of publication, Samuel Smith did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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