I’ve got cash sitting in my Self-Invested Personal Pension (SIPP) right now and I’m on the lookout for investment opportunities. I want to get that capital working for me.
Could Meta Platforms (NASDAQ: META) stock be a good option for my portfolio after its 9% fall on Thursday (30 April)? Let’s discuss.
The bull case for Meta stock
At first glance, Meta has a lot going for it right now. For a start, there’s a high level of growth. For the first quarter of 2026, the company’s revenue amounted to $56.3bn, up 33% year on year. Meanwhile, net income was $26.8bn, up 61%. Second, we have profitability. Last year, the company’s return on capital employed was about 26%, which is high.
Additionally, we have a founder-led company. History shows that these are often good investments in the long run because founders tend to make decisions with long-term growth in mind.
I’ll point out here that CEO Mark Zuckerberg has shown the ability to adapt to technological shifts successfully (eg Facebook’s shift to mobile). He’s also shown the ability to buy good companies cheaply (eg Instagram and WhatsApp).
Finally, there’s the fact that the company’s already using artificial intelligence (AI) very effectively. Not only has the technology improved ad performance but it has also enhanced engagement with platform users.
It’s worth noting that looking ahead, Zuckerberg has big plans on the AI front. “We’re on track to deliver personal superintelligence to billions of people,” he said in the Q1 earnings.
As for the valuation, it looks very reasonable. After the recent share price fall, the forward-looking price-to-earnings (P/E) ratio is only 22.
Multiple red flags?
Digging deeper though, there are a few issues with this Magnificent 7 company from an investment perspective. One is the fact that the company’s spending an enormous amount of money on AI.
In its earnings call this week, it said that total expenses for the year are expected to be $162bn-$169bn. That’s far more than the company made in profit last year (its net profit was about $60bn).
Can we be sure that this spending will pay off? No, and that’s why the stock tanked on Thursday – there’s quite a bit of uncertainty here.
Another issue is the business model. Today, Meta’s business model is mainly built around serving up ads to ‘doom scrollers’. I’m not convinced that this is a strong business model. To my mind, companies like Alphabet, Amazon, and Microsoft have far better business models (note that all of these companies offer cloud computing services to businesses and Meta doesn’t).
Finally, broker sentiment isn’t the strongest at the moment. While the average price target ($855) is well above the current share price, brokers have been lowering their price targets since the Q1 earnings report. That’s not ideal – this kind of activity tends to put pressure on a stock.
Will I buy?
Weighing this all up, I won’t be buying Meta stock for my SIPP right now. It could end up doing well in the years ahead, but to my mind, there are better opportunities in the market for me right now.
