Amazon vs. Meta Platforms: Which Stock Is a Better Buy Now? – The Motley Fool

Returns as of 03/21/2022
Returns as of 03/21/2022
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Amazon ( AMZN 2.55% ) surprised investors earlier this month when it announced a 20-for-1 stock split. Based on the stock’s approximate current price of about $3,000 per share, this split would put shares at around $150 each, making them more affordable to retail investors. In fact, the share price would be below Meta Platforms( FB 4.16% ) current stock price of around $200 today.
Ahead of Amazon’s stock split and considering that Meta Platforms’ shares have crashed recently, it’s a good time for investors to take a look at the two tech companies‘ stocks to consider if either of them looks attractive. If they both do, which one is the better buy?
Image source: Getty Images.
Though Amazon’s upcoming stock split will certainly make its shares easier for retail investors to buy, investors should understand that it doesn’t make the stock more attractive. It’s not just the price that will be split in 20 — each share’s allotted stake in the company will be split, as well.
Nevertheless, Amazon shares are looking more attractive these days. Shares are down 3% over the last year. This compares to the S&P 500‘s 9% gain over this same period.
Further, because Amazon’s earnings per share have increased rapidly over this period, the valuation multiple has fallen significantly, declining by about 37%. This puts Amazon’s price-to-earnings multiple at 46 today — not bad for a company that analysts expect to compound earnings per share at an average rate of 35% per annum over the next five years. 
Amazon stock looks like a good buy at this level. But is it as good of a buy as Meta Platforms?
Shares of Meta Platforms, Facebook’s parent company, have gotten clobbered recently. They’ve slid more than 40% in 2022 alone.
The stock’s massive decline stems from investor worries about the company’s decelerating revenue growth. Revenue grew just 20% year over year in Q4, down from 35% growth in Q3 and 33% growth in the fourth quarter of 2020. Even more troubling, management guided for first-quarter revenue to increase just 3% to 11% year over year.
Weakness during the period, management said, is largely due to headwinds from advertising measurement and tracking challenges created by recent changes to Apple‘s iOS. But other notable expected headwinds during the period include foreign-exchange rates and tough year-ago comparisons, Facebook management added.
While these are definitely issues investors should continue to monitor, the stock’s more-than-40% decline may have overcompensated for the increased risks to owning shares of Meta Platforms. The stock’s price-to-earnings multiple today is just 14 — an anemic level for a highly profitable market leader.
While both of these stocks look attractive today, investors may be wise to choose Meta Platforms over Amazon, despite Amazon’s upcoming stock split. The recent pummeling of Meta Platforms’ shares may have put the stock in bargain territory.
Sure, investors will have to monitor Meta closely to ensure that it successfully navigates its current challenges. But the stock’s substantial drop may merit a bit of greed from investors — at a time when fear is the primary sentiment surrounding the tech-company’s stock.

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