Given the market’s recent pullback, many investors are likely on the hunt, trying to find oversold stocks. One stock that has been hit particularly hard over the past month and looks like an attractive opportunity to consider today is Meta Platforms (META 0.25%). The Mark Zuckerberg-led company operates major social networks, including Facebook, Instagram, WhatsApp, and Messenger.

Not only do Meta’s platforms boast the valuable asset of a combined 3.35 billion daily active users, but they also represent a means for Meta to deploy artificial intelligence (AI) features that could help strengthen Meta’s competitive positioning over time. Zuckerberg has been ramping up AI investments across these platforms and is now also reportedly planning to launch a stand-alone app dedicated to AI as well.

Down about 20% since Feb. 14, Meta stock has the characteristics of a potentially great investment.

Strong growth

Meta’s financial health, captured by its strong sales and profit growth and its robust balance sheet, stands out in this turbulent economic environment and volatile market.

The company posted record revenue of $164.5 billion in 2024, a 22% increase over the previous year. This top-line growth helped Meta’s earnings per share skyrocket by 60% to $23.86.

Meta CEO Mark Zuckerberg has long said that there are two drivers to the company’s revenue performance: audience engagement and the company’s effectiveness at monetizing its engaged user base. Highlighting how well Meta is doing on the engagement front, the company’s 3.35 billion daily active users at the end of its fourth quarter was up 5% year over year. Such an engaged audience, combined with Meta’s efforts to improve its ad products, helped drive 6% year-over-year growth in ad impressions in Q4 and 14% growth in average price per add over the same period.

Looking to the company’s balance sheet, Meta has a war chest of $77.8 billion in cash and marketable securities — a figure that far exceeds its $28.8 billion in debt. And if Meta’s debt sounds like a lot, some context is in order: Meta could pay off this debt in one year if it wanted to. The company generated more than $52 billion in free cash flow (the cash flow left over after day-to-day operations spending and capital expenditures) in 2024.

There are risks

Relative to its growth, Meta has a very reasonable, if not cheap, valuation. Shares trade at about 24 times earnings. Nevertheless, there are some key risks to consider.

While Meta Platforms presents a compelling investment opportunity today, it’s important for investors to weigh the potential risks alongside the benefits. The ongoing shifts in the economic landscape, coupled with heightened competition in the digital advertising market, could pose challenges for Meta’s future growth. For instance, companies could reel in their advertising spending significantly if the U.S. economy slows. Further, regulatory scrutiny is another critical concern, especially as governments globally are increasingly focused on data privacy and antitrust issues concerning major tech companies.

Overall, however, Meta stock’s valuation seems to do a good job of pricing in these risks. A price-to-earnings multiple of 24 is attractive for a company that grew revenue and operating earnings 21% and 43% year over year, respectively, in Q4. Further, Meta’s highly engaged user base is an extremely valuable asset that will pay “dividends” for years to come.

Additionally, it’s worth noting that Meta has successfully navigated turbulent times in the past and is likely to do so with grace yet again if challenges arise.

All of this to say, Meta is well-equipped for tough times if they do arise.

At its current price, therefore, Meta stock is a good option for investors looking to buy reasonably priced shares of a growing business with strong financial health.