Meta Platforms (META -2.15%), formerly known as Facebook, is still one of the biggest names in the tech industry. It's the "F" in the FAANG acronym used to denote five major tech companies in the market these days. At least it is for the moment.

Since the company pivoted its primary development focus on its metaverse offering (hence the name change to Meta Platforms), investors have been second-guessing the decision and abandoning the stock. The stock price is down roughly 50% since it announced its name change on Oct. 21, 2021. The name change itself has little to nothing to do with the price fall. What has investors concerned is the business results, which have been pretty lackluster.

The stock price has fallen enough that the valuation puts Meta in value investing territory, despite being a growth name. But does the drop make Meta Platforms a great value play? Or is it just a value trap that will burn investors?

Meta now has an attractive valuation

Value investors like Warren Buffett make money in the market by investing in companies that they believe are worth more than their current price. A whole multitude of stocks can be considered value investments -- it's not restricted to one industry. A good starting point for finding value plays is looking at a company's valuation. For Meta Platforms, its price-to-earnings ratio is much lower than its FAANG peers.

Chart showing Meta's PE ratio lower than those of Microsoft, Apple, and Alphabet since late 2021.

META PE Ratio data by YCharts

At 14 times earnings, Meta also trades at a significant discount to the S&P 500 (currently at 22.6). That's an inexpensive stock, even when looking at Meta through a multi-decade lens.

However, while valuation is a starting point, it doesn't tell the whole story. You have to examine how the business is doing, and spoiler: It's not good.

Q2 results were lackluster

During the second quarter, Meta reported yet another disappointing set of results. Revenue was down 1% year over year, and its operating margin fell from 43% last year to its current 29%. Meta blamed its revenue drop on two factors: A weak advertising environment and Apple's iOS privacy changes. While there is some truth in both headwinds, Alphabet, which derives most of its revenue from advertising, still grew its ad revenue by 12% year over year in Q2.

Even comparing it to another social media company like Pinterest, which grew revenue by 9% in Q2, doesn't give Meta any leeway. It's pretty simple: Meta is struggling to attract advertisers, and that's a problem.

In the meantime, Meta spent heavily on its Reality Labs initiatives, which focus on augmented (AR) and virtual reality (VR) as well as the metaverse. In Q2, Reality Labs brought in $452 million in revenue but lost $2.8 billion in return.

On the bright side, its flagship app, Facebook, recorded the highest number of daily active users (DAUs) ever during the quarter. But this was offset by falling average revenue per user, which fell by $0.30 from $10.12 per user during last year's Q2.

These aren't great results, but remember, the stock is trading like the company is in significant decline.

What should investors do?

It's easy to get caught up in the negative Meta narrative because the company is practically writing the bear case for the stock in each earnings report. But Meta is investing heavily in innovative technology. Very few companies have the resources Meta does in the AR and VR space, and if one of those offerings takes off, then Meta's stock will likely regain its lost glory.

Additionally, the company repurchased $5 billion in stock during Q2 and has the authority to repurchase $24 billion more. Meta has reduced its outstanding shares by about 6% since its buyback campaign began in January 2021. Although some of this is used to offset stock-based compensation, it still has a meaningful effect.

At 14 times earnings, Meta Platforms has a spotless balance sheet and solid cash flows (even though its margins are ticking down). While growth isn't currently present, once the economy emerges from its advertisement spending pause and Meta figures out how to gather meaningful data from its iOS users, it will return in force.

There isn't a whole lot of downside to Meta's stock -- business disaster is already priced in. But, on the flip side, if only one thing goes right for Meta, the stock should see some recovery. That one-sided risk profile makes Meta an excellent candidate for a value investment.

The caveat investors need to be aware of though is if none of Meta's bets work out, investors may see little to no return on their investment.