Meta stocks have added more than 100% since the beginning of 2023, but are still 40% off their peak prices. So, the recent rally should be considered as sustainable with a stopover at current levels. Meta stocks are indeed too cheap now for such a company despite fears over inflated spending on metaverse.

The company has reported Q1 2023 revenues at $28.65 billion, beating consensus by $990 million. The management forecasts $29.5-32.0 billion revenues for the Q2 2023, which is above the average analysts’ forecast of $29.5 billion. The macroeconomic background hasn’t changed for the better, meaning that Meta has at least partially solved its issues regarding Apple’s privacy policy, and boosted Reels revenues.

Meta could mitigate Reality Lab losses that are related to the metaverse, and return to the earlier pace of revenue increases. AI solutions may help revenues to recover. AI recommendation algorithms could help as their introduction increased user time spent on Instagram by 24% compared to the Q4 2022, while increasing monetisation of Reels and Facebook by 30% and 40% respectively. Staff cuts should have a positive effect on the company’s margins too.