Two Legendary Investors Just Bought Meta Platforms Stock. Is It Time for You to Buy?

The latest round of Form 13Fs has dropped, and that means investors get to see what billionaire hedge fund managers were up to during the second quarter. One popular stock to buy was Meta Platforms (NASDAQ: META), and two prominent billionaire hedge fund managers bought the stock. Bill Ackman at Pershing Square increased their stake by 20% during the quarter, and it now makes up nearly 10% of its holdings. David Tepper of Appaloosa Management increased his Meta stake by more than 50%, and it now makes up a 5% position in his portfolio.

That's two smart investors dumping a lot of money into Meta's stock, but that information is now a bit old. The 13F filing reveals only what a firm's positions were as of June 30. Since June 30, Meta's stock is actually down 3% from where it ended the quarter. However, these two could have bought at any time during Q2. Since April 1, Meta's stock is down around 6%.

So right now is actually a better buying opportunity than during any time in Q2. Is Meta still a buy?

Image source: Getty Images.

Meta's Q2 was a bit lackluster

Prior to Q2's earnings announcement, Meta stock was actually on the rise during the start of July, leading to quick short-term gains for these two investors. However, that all came crashing down following a poorly received earnings report. While Meta's revenue soared 28% during Q2, its costs increased by 55%, leading to shrinking operating profits. The market wasn't impressed by this or its spending plans and sold the stock off as a result.

There are also questions circling about Meta's long-term plans for all its artificial intelligence (AI) computing infrastructure investments, which led to CEO Mark Zuckerberg releasing a massive document on Meta's AI plans. But it didn't give a rock-solid path for Meta to start monetizing its AI business, which the market is begging for.

All of this has caused Meta's stock to be priced very cheaply, as the market is growing skeptical of Meta's path.

META PE Ratio (Forward) data by YCharts

At 17.5 times forward earnings, it's far cheaper than the 21.4 times forward earnings the S&P 500 (SNPINDEX: ^GSPC) trades at. With Meta's future expectations below those of the broader market, I think it's clear that the market is not happy with Meta.

However, that could be exactly why Ackman and Tepper bought the stock. These two are known to be value investors and scoop up deals when they see them. They are presumably playing the long game with Meta's stock, confident that it will eventually become a viable AI business. Time will tell if they're right, but if they are, Meta's stock has massive upside based on the low price it's trading at now.

I think Meta could be a great deal at these levels, but it's far from a surefire bet.

Keithen Drury has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.