Metaplanet (TSE:3350) Stock Valuation Check After Sharp Share Price Swings

Metaplanet stock in focus

Metaplanet (TSE:3350) is back on investors’ radars after a recent move in its share price, with the stock closing at ¥232 and short term returns showing sharp swings over the past year.

See our latest analysis for Metaplanet.

The recent 1 day share price return of 3.57% comes after a series of weaker periods, with the 30 day share price return down 24.92% and the year to date share price return down 50.43%, while the 3 year total shareholder return remains very large.

If Metaplanet’s swings have you thinking more broadly about opportunities tied to digital assets, it may be worth scanning other cryptocurrency related stocks using the 20 cryptocurrency and blockchain stocks.

With Metaplanet’s share price down sharply this year, analyst targets sitting higher, and the company still reporting losses, you have to ask: is this stock undervalued, or is the market already pricing in future growth?

Preferred Price-to-Sales Ratio of 26.8x: Is it justified?

On Simply Wall St’s checks, Metaplanet screens as expensive on a P/S basis, trading on a 26.8x multiple while the last close sits at ¥232.

P/S compares the company’s market value to its revenue and is often used when a company is loss making, as is the case here with Metaplanet reporting a net loss of ¥204,492.12k on revenue of ¥11,107.76k.

Against the JP Hospitality industry average P/S of 0.8x and a peer average of 0.9x, Metaplanet’s 26.8x multiple is far higher. This points to the market assigning a very rich sales multiple relative to both sector and peers. However, Simply Wall St’s fair P/S estimate of 84.8x is even higher than the current level. This is a very strong gap and highlights how different inputs can point to a level the market could move towards if those assumptions play out.

Explore the SWS fair ratio for Metaplanet

Result: Preferred multiple of Price-to-Sales ratio of 26.8x (OVERVALUED)

However, there are clear risks here, including ongoing net losses of ¥204,492.12k, as well as heavy share price declines of 50.43% year to date and 84.63% over 1 year.

Find out about the key risks to this Metaplanet narrative.

Another way to look at value

The picture changes when you switch from sales multiples to cash flows. Our DCF model points to a future cash flow value of ¥89.2 per share, while the stock trades at ¥232, which suggests it is trading well above that estimate. So which signal do you trust more: rich sales or lean cash flows?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Metaplanet for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 16 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If this mix of rich valuation signals, risks and potential rewards feels hard to balance, take a closer look at the full picture yourself and decide where you stand with the 1 key reward and 3 important warning signs.

Looking for more investment ideas?

If Metaplanet has your attention, do not stop here. Broaden your watchlist with other stocks that could better fit your risk, income, or growth goals using the Simply Wall St Screener.

• Target potential mispricing opportunities by scanning for quality companies trading below their estimated worth with the 16 high quality undervalued stocks.
• Build a steadier income stream by focusing on companies offering higher yields and consistent payouts using the 51 dividend fortresses.
• Prioritise capital protection by filtering for companies with resilient balance sheets and sound fundamentals through the solid balance sheet and fundamentals stocks screener (40 results).

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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