The META Stock Dilemma: Buy Now or Wait for the Dip?

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Lately, it seems as if Meta Platforms (NASDAQ:META) is absolutely unstoppable. Yet, no company, not even a Magnificent Seven member, can just grow forever without any letup. For the long term, I’m sticking to my bullish META stock analysis. However, investing in Meta Platforms successfully means having a strategy and only buying at the right price points.

Certainly, Meta Platforms is making strides in the fields of social media and artificial intelligence technology. Yet, Meta Platforms has to contend with relentless competition and powerful regulators in multiple countries. So, after a relentless rally in Meta Platforms stock, it’s time to exercise caution in the short term even if you’re a buy-and-hold investor.

Is the META Stock Dividend Really a Game Changer?

There’s no denying it. When Meta Platforms announced its upcoming first-ever dividend payment, the market buzzed with excitement. Yet, now it feels like the fascination is wearing off.

It’s hard to stay excited about a quarterly dividend payment of 50 cents per share when the share price is approaching $500. On a percentage basis, Meta Platforms’ dividend is fairly negligible.

On the other hand, some traders are impressed with Meta Platforms’ announcement of a $50 billion increase in the company’s share-repurchase program. Don’t be so impressed that you overlook Meta Platforms’ problems, though.

For example, Meta Platforms has a strong competitor, ChatGPT developer OpenAI, in the field of AI technology. Not long ago, OpenAI unveiled its new text-to-video AI tool, known as Sora.

Macquarie analyst Frederick Havemeyer provided high praise for Sora:

“With this announcement of a model that can generate crisp, 60-second videos, OpenAI once again showed that its internal product developments are pushing the envelope and that its releases tend to set new bars for state-of-the-art.”

The point is that Meta Platforms can never relax and coast on its AI-market achievements. In 2024 and beyond, OpenAI and other competitors will threaten to leapfrog ahead of Meta Platforms at any given moment.

Meta Platforms Is in the Crosshairs of Regulators

Another major obstacle for Meta Platforms is the ire of regulators, both in the U.S. and abroad. This pushback could prove to be very costly for Meta Platforms, and it’s an issue for investors to consider.

In one example, New York City Mayor Eric Adams is suing Meta Platforms, alleging that the company’s Facebook and Instagram social-media platforms “purposefully manipulate and addict children and teens to social media applications.”

Meanwhile, in a move that could impact Meta Platforms at some point, a group of U.S. senators are urging the U.S. Food and Drug Administration to “take action against the marketing of prescription drugs on social media,” according to The Wall Street Journal.

Moreover, in Europe, a group of 28 organizations are calling on privacy regulators to oppose Meta Platforms’ ad-free subscription service. Plus, according to a Reuters report, Facebook will have to face a “collective lawsuit” valued at approximately 3 billion pounds ($3.77 billion). This legal action is based on allegations that Facebook “abused its dominant position” to monetize its users’ personal data.

META Stock Analysis: Stay Long, but Don’t Add Too Quickly

Despite the aforementioned concerns, my META stock analysis doesn’t call for anyone to panic-sell their shares. It’s fine to stay long if you already have a Meta Platforms share position.

On the other hand, there’s no rush to add to your stock position now. It’s sensible to wait and see how Meta Platforms’ issues play out for a while.

Meta Platforms will almost certainly overcome these issues, but not without conflict and cost. So, if you want to be cautious, you can wait for META stock to pull back below $425 before adding to your share position.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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