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Meta Platforms (FB 1.32%) is having a forgettable year in 2022. The company formerly known as Facebook has seen roughly 50% of its market value wiped away. A number of headwinds — including privacy policy changes at Apple, supply-chain shortages, competition, and the Russian invasion of Ukraine — are all playing a part in pushing down Meta’s stock price.
That said, the sell-off is creating an opportunity for long-term investors who can withstand these short-term headwinds. Let’s look at Meta’s prospects and valuation and consider if Meta Platforms stock is a buy right now. 
FB Market Cap data by YCharts
With all its talk about transforming into a metaverse company, it can be easy to overlook Meta’s social media dominance. Its family of apps, including Facebook, Instagram, Messenger, and WhatsApp, boast over 2.87 billion daily active users. All of its apps are free to join and use. Meta makes money by showing advertisements to those browsing its apps.
In that regard, it has done an excellent job, boosting revenue from $40 billion to $118 billion from 2017 to 2021. You can understand why marketers covet the opportunity to advertise with Meta. There is scarcely any other platform where advertisers can reach the type of scale that Meta can offer.
Additionally, social media users on Meta’s apps voluntarily reveal information about themselves such as marital status, where they went to college, and what their favorite sports franchises are. This information is then used to deliver targeted advertising that’s more effective than spending without the aforementioned data on individuals. For example, there is little value in showing ads for a Los Angeles Clippers game to a fan who has stated their favorite team is the Miami Heat. 
FB Revenue (Annual) data by YCharts
The solid return on investment can explain why marketers keep coming back to Meta Platforms and why revenue has exploded the way it has over the years. Of course, Apple’s privacy changes are making it more challenging for Meta to collect user data, which then makes it harder to sell targeted advertising, but Meta may find a workaround. For instance, it can add features to its platform that encourages users to share even more information directly with Meta.
The bigger concern is rising competition from short-form video site TikTok. So far, Meta has managed to sustain extremely high engagement and customer retention. Meta’s 2.87 billion daily active users represent a 6% increase from the same time a year ago. In other words, it has added a whopping 150 million daily active users in that time. For now, folks spend time on TikTok in addition to the time they spend on Meta’s family of apps. If that usage mix changes to start taking time away from Meta, then it will have a bigger problem on its hands.
Image source: Getty Images.
FB Price to Free Cash Flow data by YCharts
That said, at a price-to-free-cash-flow multiple of 14 and price-to-earnings ratio of 15, Meta’s stock is a good value even accounting for the risks in the near term. Billions of folks around the world have developed a habit of browsing Meta’s family of apps daily. It’s going to be hard for a competitor to break those habits, especially because the apps are free to use. And marketers will always be willing to pay for the chance to influence people.
So to answer the question posed in the headline, yes, the sell-off in Meta Platforms has made it an excellent stock to buy.
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