Meta Platforms (META 0.19%), the parent company of Facebook, is on something of a journey. Founder, chairman, and chief executive officer Mark Zuckerberg insists the metaverse is the next big thing, and he's betting the company's future on it. Chief operating officer Sheryl Sandberg, the architect of the company's lucrative ad-based revenue model, is stepping down. Meanwhile, Meta's stock price is down 55% from its all-time high.
So what are investors to make of all this? Is the stock a screaming buy, or a train wreck waiting to happen? Let's dig in and see.
Zuckerberg's big metaverse gamble
In case changing the name of the company didn't get the point across, Zuckerberg has made it clear: His company is going all-in on the metaverse. Back in February, Meta announced that its Reality Labs segment, which is tasked with bringing Zuckerberg's vision of the metaverse to life, lost over $10 billion in 2021. That's on top of losses of $6.6 billion in 2020 and $4.5 billion in 2019.
Now, let me be clear: Meta can afford to spend the money. The company generated more than $39 billion of net income in 2021, and that's after accounting for the $10 billion in loss in its Reality Labs segment. Nevertheless, losses are losses. If they continue to grow -- as Zuckerberg has said they will -- some investors may question if the CEO's vision is the best use of the company's resources.
But it's not just Zuckerberg's decision-making that has come into question. COO Sandberg announced her departure from the company in June so that she could focus on philanthropy. However, reports later surfaced that Meta had launched an investigation into Sandberg's alleged misuse of company resources for personal projects, including her upcoming wedding.
The loss of Sandberg, who pioneered much of the company's booming ad business, must raise concerns for investors about whether Meta will continue to retain and grow its digital ad market share.
Is Meta Platforms a buy?
Despite the questions about how the company is being run, you can't deny that Meta is a juggernaut. It generated over $119 billion in revenue during the last 12 months, and currently boasts an operating margin of 36.7%.
Its price-to-earnings multiple is 13 -- only a whisper away from its all-time low of 11.8. You can make a strong case that at its current price, Meta is one of the best value stocks today, something many people would not have imagined was possible ten years ago. That said, the next few months look crucial for the company. I would suggest waiting on the sidelines until investors get additional clarity around how much the company is willing to spend on Reality Labs.