It’s understandable if you’re impressed with Meta Platforms’ (NASDAQ:META) first-quarter 2023 results. However, it appears that any positive news has already been priced into META stock. Besides, there are notable red flags surrounding Meta Platforms, including scrutiny from an arm of the U.S. government.

Meta Platforms and its CEO, Mark Zuckerberg, are no strangers to controversy. Zuckerberg and his company always seem to be in the critics’ crosshairs. Sometimes that’s not a dealbreaker, but it’s a major problem when regulators object to Meta Platforms’ business practices.

It’s fine if you’re bullish on Meta Platforms’ deployment of artificial intelligence (AI) or the company’s foray into the metaverse. However, even if you’re optimistic about Meta Platforms’ future prospects, consider exercising caution as an investor. Conduct your due diligence, and you might end up agreeing with me that it’s not an ideal time to invest in Meta Platforms.

META Stock Definitely Isn’t Cheap

Soon after the company released its Q1 2023 results, META stock leaped from $210 to its 52-week high of $244.92. If you invested in Meta Platforms pre-earnings, congratulations. Now, however, it’s time to consider whether the shares are a good value.

According to several metrics, the answer is definitely no. Take a glance at how Meta Platforms measures up to the sector median, per these three commonly cited measures of valuation (these are all GAAP-measured for the trailing 12 months):

• Price-to-earnings (P/E) ratio of 28.91x, versus sector median P/E ratio of 20.02x
• Price-to-book (P/B) ratio of 4.79x, versus sector median P/B ratio of 1.66x
• Price-to-sales (P/S) ratio of 5.26x, versus sector median P/S ratio of 1.22x

So far, META stock looks too pricey.  Next, consider whether Meta Platforms’ quarterly results were really all that great. On a year-over-year basis, Meta Platforms’ revenue only rose 3% and the company’s net income dropped 24%.

Regulators Will Watch Meta Platforms Closely

Now, let’s take a closer look at a problem that could persist for a while. Specifically, regulators are likely to target Meta Platforms during the coming months.

I’m not referring to French regulators, who recently ordered Meta Platforms to “change its access rules for ad verification partners,” according to Reuters. Prospective investors should monitor this news story for further developments, though.

Rather, I’m mainly alluding to the scathing allegations directed at Meta Platforms by the Federal Trade Commission (FTC). Samuel Levine, director of the Bureau of Consumer Protection at the FTC, stated outright that Meta Platforms’ Facebook “has repeatedly violated its privacy promises.”

Levine’s harsh words didn’t end there. He added, “The company’s recklessness has put young users at risk, and Facebook needs to answer for its failures.” Presumably, Levine is alluding to how Meta Platforms collects and uses data from Facebook’s Messenger Kids app.

At some point in the near future, the FTC may follow up its words with action. A recent Reuters reports stated that the FTC “proposed tightening an existing agreement on privacy to include a ban on making money from minors’ data.”

Ultimately, Meta Platforms could end up losing an important revenue source. Per Reuters, the FTC has gone so far as to propose “barring Facebook from making money off data collected on users under age 18.”

So, Is It Too Late to Buy META Stock?

Meta Platforms could be in hot water with U.S. regulators for a prolonged period of time. This would be bad for Meta Platforms’ reputation and, quite possibly, for the company’s bottom line as well.

Furthermore, Meta Platforms’ quarterly results don’t necessarily justify the company’s valuation on Wall Street. All in all, I’d say it’s too late to jump into the long side of the trade with META stock. The best strategy now is to wait for a share-price pullback and then reevaluate the risk-to-reward dynamic with Meta Platforms.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.