In this age of digitization, most of our friends, family members and even acquaintances utilize social media platforms for a multitude of reasons. The primary reason is to keep connected with everyone across the globe, and nobody has been able to do it better than Facebook just yet, boasting a staggering 2.93 billion active users worldwide.
The social media giant recently underwent a metamorphosis and has now been rebranded as ‘Meta’ – signifying its intention to build and operate a metaverse – a fully decentralized, block-chain-backed virtual platform that will act as a community and economy for its users from the world over.
The metaverse will be a lucrative prospect for businesses looking to engage in diverse verticals, with experts pegging the newfound industrial spurt at billions of dollars.
This new investment is a promising avenue for investors in India, especially for those already well-versed with FAANG stocks. For the uninitiated, FAANG is a now-famous acronym that refers to stocks of the big-tech companies – Facebook (now Meta), Amazon, Apple, Netflix, and Google (now Alphabet).
Already possessing immense goodwill in the stock market, the value of these holdings rose further during the pandemic, essentially because –
(a) the sheer volume of consumption of services provided by these companies grew exponentially during the pandemic and
(b) owing to their indispensable services (information exchange, shopping, communication, and entertainment), while other multinationals flayed, these five flourished.
Looking at Meta’s shares specifically, it has increased significantly since its IPO launch in 2012. Sure, they have seen the usual ups and downs before reaching peak levels around mid-2021. Then, there was a big drop of almost 25% in February 2022, after Meta released its revenue outlook that fell short of analyst estimates. But given the situation they are poised in, this serves as a good opportunity for investors to get in and reap the benefits in the long run.
Why Should You Invest in Facebook/Meta Stocks?
FB’s monthly active user base represents 70% of the world’s internet-using population. The company boasts of tremendous revenue growth over the last ten years, from $3.7 billion when pegged in 2011 to over $118 billion in 2021. It translates to a 41% compounded annual growth rate, way past industry standards and miles ahead of its competitors. For the year gone by, in 2021 alone, the company has declared $39.3 billion received in operating income alone, and even though the total number of active users declined in 2021, it reported a revenue per user of $9.39 in the last quarter of the year – it’s highest so far in the last two years.
Presently, the FB stock is down by 50% from its highs, It is currently well below its 200-day moving average line and has delivered its highest ever operating income for the financial year 2021. Corrections in the stock price of companies with strong fundamentals provide a great opportunity to consider owning them, with a factor of safety.
How Risky Is The Metaverse Bet?
Ever since the erstwhile Facebook, now Meta, announced its grand plans to create and develop the metaverse in October 2021, there has been a complete change in the organisation’s structural ethos, with the restructuring asking employees to lay more emphasis on the development of augmented and virtual reality.
This has come at a cost, with senior leadership chalking out exorbitant budgets to push for the same – an allocation that has been made as Meta joins the race in outpacing other big-tech companies.
Despite a range of problems that have come with this push, that include inflation and disruptions in the supply chain, senior leadership at Meta is pushing forward with the end goal of the Metaverse in mind.
However, before you double-guess your decision to buy Facebook or Meta shares, you must note that the metaverse is still in its nascency. Certain tech companies are still figuring their way out and wondering how to optimise the platform to their benefit and needs.
Experts believe that 2022 will be the year in which Meta can truly captivate the market and audiences alike, and investors are advised to be on a keen lookout to gauge not only the company’s growth but expense profile as well.
Analysing the Meta Stock Performance
Before you get to know how to buy Meta stock in India, it is worth analysing FB’s share performance. Here is the stock’s performance this year that shows a consistent downward trend. While for some, it may be a sign of distress, as you can see from the information provided here, this can be considered an opportunity in disguise to own a small part of one of the largest tech companies in the world.
Looking at the chart of the performance of the last five years, there are a lot of positives and benefits that can be taken for those who have invested in Meta.
The EBITDA (profitability of a company) has more than doubled to a current value of $54.72 billion. The net profit margin has come down a bit, though, and there could be several reasons, such as the date 4th of February 2022, when a slump in shares of over 25% resulted in over $230 Bn being wiped off the market capitalization.
Meta has encountered similar situations in the past but has proved to bounce back in due course of time. The revenue and EPS (how much a company makes for each share of its stock) have more than doubled to $117.93 billion and $13.77, respectively.
As is evident from the charts above, Facebook or Meta has been generating a steady rise in its cash flow over the years.
With prices of shares currently at a historical low, many experts suggest investing in the company now. In contrast, many more have indicated this to be a result of a combination of unforeseen expenditure on the metaverse, capped by a multitude of factors, including changes made by Apple (privacy updates), competition for ad revenue from TikTok (contributed 60% growth in viewership), and increased competition from the likes of Google.
How to invest in Meta / FB Stock from India?
Investing in U.S. stocks is considered a prudent practice for Indian investors, providing them with the dual benefit of helping them own a fraction of some of the biggest conglomerates in the world while also enabling them to earn more, owing to the weakened rupee-to-dollar pegging down. Here’s how you can buy FB shares in India:
Direct Stock Investment: Stockal allows you to invest directly in the stock of FB and other tech giants. This is conveniently achieved through fractional investing, which gives you the freedom and flexibility to invest as per choice and affordability. The steps involved here are:
- Identify your risk appetite: No pain, no gain. It is critical to understand how much risk you are willing to take and when your cutoff point is reached.
- Select an investment medium: Carefully evaluate the investment mediums like brokers, Stockal, NSE IFSC, etc., before choosing to open an account.
- Decide the quantum of investment: Choose the amount to invest according to your risk appetite, investment goals, and time horizon.
- Place the order: After carefully evaluating your options, understanding the regulatory requirements, and researching the stock to be bought, go ahead and place the order.
Basket Stacks: Developed by reputed hedge funds and global asset management companies, basket stacks by Stockal are a pre-designed collection of stocks and exchange-traded funds. They are a great way to diversify your portfolio with a single click without having to deep dive into each stock that forms a part of the stack.
The US Tech Bluechip Stack is a popular basket stack that allows you to invest in best-of-breed US tech companies, including FB. One of the most advantageous features of this stack is the active rebalancing that allows you to invest wisely and keep moving the funds to maximize your returns while minimizing risks.
ETFs: When you buy the stock of a company, that’s all you get. To create diversity in your portfolio, you must invest in stocks of multiple companies, which may not always be feasible. An Exchange Traded Fund (ETF), on the other hand, allows you to invest in various companies while tracking the performance of a specific sector or index. Stockal enables you to easily buy ETFs fractionally, giving you flexibility and affordability. Investing in FAANG or top US tech companies is easily done through an ETF that automatically gives you access to FB shares as well. The limitation is that you can’t distribute the proportion of your investment as per your choice. It is automatically apportioned based on the composition of the sector being tracked by the ETF.
Mutual Funds: Another way to add diversity to your portfolio is by investing in mutual funds in the US markets. Mutual funds also offer great flexibility via the Systematic Investment Plan, through which you can keep investing in small, regular amounts. It also helps to offset the market volatility due to different entry points based on your SIP due date.
Let us conclude with the question we began with – How to Invest in Facebook from India?
As you can see, there are a few different ways to invest in FB shares. The best way depends on your ability to take risks and time your moves. With Meta shares near an all-time low, this might be the right opportunity to invest directly via Stockal, which will likely cost you the least.
Stockal offers you the benefits of a seamless onboarding process, a robust and secure platform, and timely alerts and analysis. To learn more, you can visit Stockal’s website here.