Is 'super cheap' Meta a buy or a miss? Here's what top tech investor Paul Meeks says

Published Tue, Aug 16 20227:21 PM EDT

Facebook-owner Meta — like most tech stocks — has fallen sharply this year, and now investors might be wondering whether it's time to buy the dip. Paul Meeks, portfolio manager at Independent Solutions Wealth Management, said that although Meta looks "super cheap" right now, it's not a buy – it's a hold or a sell. "Every time we hear from them, they're lowering numbers again … it might be super cheap, but it can't rally until we know that the bottom is in," Meeks told CNBC Pro Talks last week. "So I think 'buy' is off the table." For those investors who already own the tech giant, Meeks said hold. "I don't think I would … sell this beaten horse," he added. Meta has dived more than 45% this year, as investors fled growth stocks such as Big Tech. Although markets have recently rebounded — Meta is up over 10% since the start of the month — the tech-heavy Nasdaq is still down around 17% year-to-date. Meeks says one factor to consider for Meta is how the metaverse develops. The company changed its name from Facebook in 2021 to reflect its ambitions in the metaverse — or a future set of virtual worlds where people live, work and play. "So we need to see that market somewhat developed, right?" Meeks said. "I don't need to wait many, many years for the metaverse to be fully invested, and Meta to be declared a winner, before I invest in that stock. But I need to see it start to roll — and right now it's more of a plan than anything concrete. So that also keeps me away from it." Meeks also highlighted that there are no guarantees Meta will become a leader in the metaverse. "If the metaverse does develop, who's to say that Meta is going to be the leader?" he asked. "They'll be one of the major players for sure, because they're helping to fund the development, but everybody is going to be in it." Meeks is not the only one to warn investors off Meta because of the uncertainty of the metaverse. Asset manager Needham in July downgraded Meta to underperform from a hold rating. It said the company's heavy investments in the metaverse — as it expects slower revenue growth — could take too long to pay off. As Meta continues to spend heavily to develop virtual reality and augmented reality products, it lost $2.81 billion on $452 million in revenue from its virtual reality division, Reality Labs, during the quarter ending in June.