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Meta (META) reported a better than expected 4Q22 after the close Wednesday. Revenue was off only 4% compared to a year ago – with many concerned it would be a lot worse. In addition, META continues to tighten up its operations, reducing its FY23 total expenses guidance to $89-$95 billion from $94-$100 billion previously. META also increased its share buyback authorization by $40 billion. META shares are up nearly 20% in the after hours.

My concern is that META is now overvalued. META had revenue of $116.6 billion in 2022. I’m modeling a 5.5% decline in 2023 to $110 billion. If expenses come in at the midpoint of their guidance, that would be $92 billion resulting in $18 billion in operating income this year. A 20% tax rate works out to net income of $14.5 billion or ~$5.50 EPS. At its current after hours price around $180, that means META is trading at more than 30x current year EPS which is too expensive for a maturing company heading into what I believe will be a nasty recession.

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