The S&P 500 bottomed on October 12 at 3491.58. It’s a Wall Street shibboleth that the market leads the economy by six months, so let’s see – November 12, December 12, January 12, February 12, March 12, April 12 – yep, here we are. All the forces behind the Fed’s tightening regime should be peaking. I like Meta Platforms (META) in this environment, explains Michael Murphy, editor of New World Investor.
Meta is moving towards the “everything app” that keeps users engaged. In November, they updated WhatsApp to allow users in Brazil, Indonesia, Mexico, Colombia, and the UK to browse businesses by category, and send messages to them, with plans to allow users to make secure payments directly in chat following a launch in India. In December, MercadoLibre said it was testing WhatsApp payments in Brazil.
CEO Mark Zuckerberg said chat payments now are live in Brazil. Small businesses using WhatsApp Business can link a supported payment partner and build an order within the app to securely accept payments using MasterCard and Visa debit, credit, and prepaid cards. Zuck said: “We’ll be rolling this feature out to more businesses in the coming months.”
This is a big deal. WeChat, the platform that is owned by Chinese tech giant Tencent, is described as Facebook, Twitter, Snapchat, and PayPal all rolled into one. More than a billion users, primarily in mainland China, rely on the social network to do virtually everything, from ordering groceries to booking a yoga class to paying bills, without leaving the app.
Argus Research upgraded Meta to a “Buy” with a $270 target price. They said Zuckerberg’s cost-cutting measures are working and should have a very positive effect on the company’s bottom line. They added:
“When you look at Microsoft and Alphabet, you’re talking 5% or 6% cuts. This is a 24% cut – a big cost-cutting measure to save about $8 billion on their 2023 expense projections. That’s a serious measure in a very uncertain revenue growth environment, and gives the market what it wants – increased profitability and cash flow.”
Recommended Action: Buy META with a $400 target.
