 Meta stock, it's a great lesson in valuation. If you're looking to learn about how to value stocks, Peter Lynch or Warren Buffett style investing, well, this is the video for you. Meta stock has not only been a growth stock, but then recently tumbled to become a value stock and now recovered to become a growth stock again. Here we're looking at a chart of Meta and as you can see in 2021 towards the end it almost got to $400 per share. Then something happened that caused it to tumble through 2022 to under $90 a share, only to recover back up to $286. Let's overlay some notes. If you look in 2021 it was a growth and momentum stock until some news came out that threatened its revenue. Apple changed its privacy policy so the algo was going to hurt Facebook's ads delivery system at least on iPhones and that hurt the stock or caused a cascade from a growth stock to a unfavorable value stock. It tumbled so much after it missed a few quarters of earnings that the value investors who were not interested before came to support it and now it's a growth stock again. If we look down below we know it was a value stock as the price to cash flow which is one metric that measures net income was super low. A five price to cash flow is extremely cheap. That's five years of cash flow. From a growth stock when it was trading at over 20 times cash flow to only five times cash flow. 20 years of cash flow, five years of cash flow. That's one way to look at it. Now it's back up to about 15 times cash flow. Another view or way to look at it is I have here earnings yield down below. The earnings yield it's basically like PE but backwards you're dividing the earnings by price and that's how you get a percentage. When it was a growth stock the earnings yield was three to four percent which means it was in line with treasuries. Not super cheap because they were pricing in the future but then when the privacy change came and Apple hurt Facebook the yield went up as the price came down. 12% yield hugely higher than treasuries and that's when the value investors stepped in. The value investors said hey it's too cheap to be at this price I'm in as they accumulated the price rose and the yield came back down to where it was before when it was a loved stock. Huge lesson in value investing. When you have momentum everything is priced in to perfection a lot of bullishness. When it falls out of favor it's the value investors that step in to bid it up but they demand a risk premium. They want to get more earnings than treasuries and then when the demand for the stock goes up that premium that yield premium goes away. So the opportunity it came and then it went. The value investors look for that opportunity pay me to get in that's what a value investor wants a momentum investor says hey look the trend is up that's when they jump in. So you should really think about what kind of investor do you want to be do you want to be a momentum investor or do you want to get in when it's super attractive. The reason this is a great lesson is that many people believe that value investing is boring it's outdated antiquated but if you look you can get amazing returns being boring if you just waited to the earnings yields were attractive over 10 percent which is wild when you think about it now the stock was around $90 and more than triple in less than a year. So for boring that looks pretty exciting to me.