How to invest in Meta and buy FB shares
Meta Platforms Inc. - operating as "Meta" - and previously known as Facebook Inc. is a multinational technology company with headquarters in Menlo Park, California. Meta is one of the world's most valuable companies and derives the majority of its revenue from advertising.
Are you looking to buy Meta shares? Or are you anticipating a decline in the share price and would like to profit from this opportunity using CFDs? In this guide, we will explore how you can profit from price movements in the share price of Meta in either direction and provide you with a better understanding of the Meta stock.
Table of contents
- Company overview
- How to buy Meta shares (FB)
- How to invest in Meta
- Meta stock price
- Meta market cap
- How has Meta stock performed?
Company overview
Facebook, WhatsApp, and Instagram - are all apps that need little introduction and that helped Meta achieve a position where it is dominating the social media landscape.
Meta was founded as FaceMash in 2003 and changed to Facebook in 2004. The social networking service was founded by Mark Zuckerberg and his college roommates. The idea behind it was to create a social network for Harvard students. The service quickly expanded to other U.S. universities and eventually became available to the general public.
Facebook saw rapid growth in its early days. By the summer of 2004, the company was formally incorporated and had an office in Palo Alto, California. Facebook reached the milestone of having 100 million active users in 2008. Today, this number stands at almost 2 billion.
Facebook accepted its first outside investment in 2014 when venture capitalist Peter Thiel invested half a million dollars in the company. In return, he gained 10% ownership and joined the company's board. Thiel sold 16.8 million Facebook shares when the company went public in 2012 and earned roughly $640 million from this. Thiel still held on to some shares after the IPO, but his FB holdings have greatly reduced in the past few years.
Who else got rich thanks to Facebook?
WhatsApp co-founders Koum and Acton became billionaires after Facebook bought their company for $19 billion.
Co-founders Eduardo Saverin and Dustin Moskovitz also became billionaires, as did former Facebook President Sean Parker.
And how does the company make its money?
Meta made almost $86 billion in revenue during 2020 and the majority of that comes from advertising. The company is selling lucrative advertising space on its social media platforms.
Aside from Facebook, Instagram, and WhatsApp - Meta also owns Oculus, Giphy, and Mapillary.
Why is Facebook called Meta now?
Facebook surprised investors and consumers alike when it announced its rebranding to "Meta" in October 2021.
Facebook still exists as a brand, but the company itself has been renamed to Meta. Zuckerberg explained this move by saying that Meta is a better representation of where the company is heading - a company that is known for more than just one product (Facebook).
Zuckerberg wants the metaverse to be the company's main product.
How to buy Meta shares
If you are interested in buying Meta shares then follow our simple steps below:
Step 1: Choose a broker
The first step would be to pick the right online broker. Ideally, you want to choose a regulated, reputable broker that offers commission-free trading. The money you save from commission-free trading can add up quite quickly if you are an active trader.
Depending on what type of trader you are, the trading platform can also be an important factor. Day traders who often use technical analysis might require an advanced platform with sophisticated charting tools. On the other hand, long-term investors could feel comfortable managing their portfolio simply from the broker's mobile app.
Step 2: Decide how much you want to invest
After you have chosen your broker and opened a brokerage account you need to decide what your budget is and how much you will spend on the Meta shares. Share CFD trading gives you the ability to use margin. This means you only need to put up a small percentage of the full value of a trade in order to open the position.
Step 3: Review Meta's stock performance and potential
Before making an investment decision it's wise to do some research into the company's financials, future outlook, and current performance.
Start by conducting a fundamental analysis and review of the company's financial statements, business model, corporate governance, competitors, and other information.
Make sure to also consider technical analysis when reviewing the stock.
Step 4: Choose how you wish to invest
There are two direct ways of buying Meta shares:
- Physical shares, which is a popular method for long-term investors
- Share CFDs which give you additional flexibility as you can short-sell shares and use leverage
Some long-term investors choose to make use of both options - holding physical shares as a long-term investment and making use of the underlying CFD to profit from a short-term decline in the share price.
Another way to trade Meta is through index trading. One such index is the NASDAQ 100, where Meta is a major constituent. The NASDAQ 100 is generally available as a Cash CFD or a Futures CFD. Cash CFDs have lower spreads and are more suitable for short-term traders, while Futures CFDs are popular amongst position traders as no swap fees will be charged.
How to invest in Meta
Buying Meta shares directly is not the only way to invest in the company. Many investors might already own Meta shares without being aware of it. Meta is a major constituent of the NASDAQ index, and as such, many popular ETFs also have exposure to it.
Some popular ETFs that include Meta shares in their holdings are:
- Invesco QQQ Trust
- SPDR S&P 500 ETF Trust
- iShares Core S&P 500 ETF
- Vanguard S&P 500 ETF
- Vanguard Total Stock Market ETF
Major mutual funds with notable exposure to Meta are:
- Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
- Vanguard 500 Index Fund Admiral Shares (VFIAX)
- Fidelity Contrafund (FCNTX)
- SPDR S&P 500 ETF Trust
- T. Rowe Price Blue Chip Growth Fund
For example, Meta shares make up 3.80% of holdings of the QQQ ETF, which is one of the largest and most popular ETFs worldwide with more than $200 billion USD under management. The ETF has delivered an annualised return of 23.10% over a 10-year period.
Meta stock price
Facebook, Inc. had its initial public offering (IPO) on May 18th, 2012, and was priced at $38 per share.
Meta Platforms, Inc. closed on December 31st, 2021 at a price of $336.35. As of writing this article, the Meta stock price is $313.16.
The all-time high of the Meta stock stands at $382.18, which it reached in September 2021.
Meta market cap
As of January 2022, Meta has a market capitalisation of 855 billion U.S. Dollars, making it the 6th most valuable company in the United States and the 7th most valuable company worldwide.
Meta's market cap has been rising steadily since its IPO, although there have been several larger setbacks. Meta share prices tumbled in 2018, taking its market cap from $600 billion to below $400 billion.
Meta shares recovered, only to crash again in March 2020. The recovery that followed took the market cap to over a trillion dollars in 2021, although it didn't manage to stay above the magical trillion-dollar figure for too long.
How many shares of FB stock are there?
Meta has currently 2.37 billion shares outstanding. As of January 2022, the number of shares shorted stood at 24.11 million, which represents 0.87% of the shares outstanding. This is higher than some of the other tech giants such as Apple, Alphabet, and Amazon.
What percentage of Meta is owned by insiders or institutions?
Currently, insiders are holding 0.68% of Meta's outstanding shares, while 80% are being held by institutions.
Major institutional shareholders include Vanguard, Blackrock, FMR, State Street, and T. Rowe Price.
Mark Zuckerberg owns almost 400 million shares of Meta, making him one of the largest shareholders as well.
How has Meta stock performed?
Facebook Inc. had its IPO (initial public offering) in May 2012 and it went into the history books as one of the biggest tech IPOs ever, reaching a market cap of almost $100 billion. Facebook had an IPO price of $38 and closed its first trading day at $38.23 (after reaching an intraday high of $45).
The IPO received a lot of attention and was closely followed by traders and investors worldwide.
While the stock price of Meta certainly had its ups and downs over time, the company performed incredibly well. Mark Zuckerberg is one of the richest people in the world today, and Facebook has created many more millionaires.
If you invested $1,000 in Facebook's IPO, your investment would be worth more than $8,000 today.
Meta shares reached a record high of $384 in 2021, while the 52-week low stands at $253.50.
Zuckerberg ensured that he retains control over the company by introducing a dual-class stock structure, similar to what Alphabet (Google) has in place. He still owns more than 50% of the voting shares, despite his actual ownership share having steadily declined over the past few years.
Does FB pay a dividend?
Dividend payments have become more common in the technology industry in the past few years. However, Meta remains to be one of the major tech giants that so far haven't paid out any dividends yet. Instead, the company continues to reinvest the cash back into the business.
Will Meta ever start paying out dividends? At some point, Meta will mature and might reconsider its strategy, as did Apple for example. There are no indications though that this will occur in the near future, so investors will continue looking at it as a growth stock rather than a dividend stock.
Can Meta shares be traded pre-market and after-hours?
Meta is listed on the NASDAQ exchange and the regular trading hours are 9:30 AM to 4:00 PM.
Investors have the ability to trade in the pre-market (4:00-9:30 AM Eastern Time) and the after-hours market (4:00-8:00 PM Eastern Time).
However, as participation from market makers is voluntary, liquidity could be lower than usual during these sessions. The price action might also be more erratic.
Is it a good time to buy Meta stock?
Meta has been under pressure in recent weeks for a variety of reasons. Market sentiment has turned sour, and the technology sector suffered the most from this. Meta was also facing revelations from a whistle-blower and disappointed investors with their Q3 results.
Investors will now be curious to hear what plans Mark Zuckerberg has. Meta plans to focus on building the metaverse - a virtual space that can be accessed via different devices.
The company also invested heavily in its VR unit Reality Labs, and while most investors will be happy that the company is taking steps to diversify its income streams, it could drag on overall revenues for a while. So, while the metaverse remains an interesting long-term goal, the market will focus more on how Facebook's advertising cash cow is coping.
What are the charts showing?
Facebook has been trending lower since September and the key level to watch in the short term is the psychological support level at $300. A clear break below this level and the lower trendline could pave the way for a continuation of the correction toward $245. In the meantime, FB bulls will be aiming for a breakout above the upper trendline and $352 resistance.
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This information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. It has been prepared without taking your objectives, financial situation, or needs into account. Any references to past performance and forecasts are not reliable indicators of future results. Axi makes no representation and assumes no liability regarding the accuracy and completeness of the content in this publication. Readers should seek their own advice.
