Also, while digital advertising is set to remain an important element in the overall Meta Platforms story, the tech giant is making a move that could help diversify and grow its overall revenue. The impact of cost reductions and rebounding digital ad market demand could have a less noticeable impact on future results for Meta Platforms, but several other potential catalysts could help make up the difference. First, Meta’s high margins and deep economic moat justify a premium valuation.
But many Wall Street analysts are forecasting a strong upward trend in the coming months. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, and Microsoft.
- It’s now selling at a price-to-earnings ratio of 14.4, and a price-to-free-cash-flow ratio of 13.5.
- It is a bit early to guess how the Meta stock will respond to its metaverse project.
- This huge user base makes Meta an ideal avenue for advertisers to spend their dollars and reach a wide audience.
In early 2022, Meta revealed that it already had around 300,000 monthly users. Meta also intends to release a web version of Horizon before the end of 2022, allowing people to interact with the metaverse without using a headset. This will be a significant step in allowing the company to identify a target consumer base that could be monetized in the future. Meta Platforms is among the hardest hit stocks by the 2022 tech selloff, falling more than 60% year to date. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer.
The Apple headwind
Analysts are expecting revenue to dip 0.9% to $27.65 billion and for earnings per share to fall from $2.72 to $2.03. If the company can beat those estimates, the stock could soar tomorrow. Both Microsoft and Alphabet reported modest accelerations in revenue growth from the fourth quarter, showing that the worst of the tech recession could be over. Microsoft’s revenue accelerated from 2% in the December quarter to dowmarkets 7% in its just-reported fiscal third quarter, while Alphabet’s revenue growth improved from 1% to 3% with the help of weakening currency headwinds. Increasing efficiency improves the return on investment markets get on ad spending. For instance, if a person reveals their favorite movie features Marvel’s Avengers, that is likely an ideal candidate to send ads for Marvel’s Eternals out in movie theaters right now.
- MarketRank is calculated as an average of available category scores, with extra weight given to analysis and valuation.
- Shares of Meta Platforms (META -2.92%) were climbing today in response to better-than-expected numbers from big tech peers Alphabet (GOOG -1.22%) (GOOGL -1.16%) and Microsoft (MSFT -1.04%) last night.
- It’s not clear whether the plan will satisfy EU regulators or how it will go over with users.
- Reality Labs segment revenue grew to $877 million, a 22% year-over-year increase, but lost $3.3 billion; the division is receiving heavy investments and probably won’t be profitable for a while.
- Its monthly active user base stood at 2.9 billion at the end of last year.
Several initial versions of the metaverse have already been implemented in a number of video games, such as Roblox. One of the biggest issues limiting monetization of business messaging is that „it’s quite human labor-intensive,” Zuckerberg said. That’s why Meta’s click-to-message ads have only taken off where the cost of labor is relatively low. But in a world where every business has an AI agent, „the kind of success that we’re seeing in Thailand or Vietnam with business messaging could kind of spread everywhere,” he said. Still, it remains to be seen whether there will be much of a payoff in revenue and profits from general-purpose chatbots that are free to use. Since then, interest rates have surged, gas prices have climbed, and consumers have begun repaying federal student loans.
And for the businesses that use Meta’s advertising capabilities, a new suite of tools called Advantage+ can improve targeting and drive efficient marketing spending. Meta’s massive userbase and the unshakeable popularity of its platforms among users of different age groups make the company a favorite among advertisers. In the next 5 years, Meta is likely to remain the dominant social media company on a global scale, which would help the company bring in a steady stream of growing revenue and earnings.
At a much lower price, this social media giant is now attracting value-conscious investors wondering if Meta Platforms stock is a buy right now. But after Mark Zuckerberg’s company, formerly known as Facebook, reported better-than-expected second-quarter results last week and issued optimistic guidance, Meta shares jumped to their highest since iq option overview early 2022. KeyBanc Capital Markets analyst Justin Patterson upgraded his price target for Meta from $280 to $335 in a Wednesday note despite calling Threads an “immaterial contributor” to the company’s broader outlook. Algorithm-based forecasting services gave a mixed bullish long-term Meta Platforms stock forecast for 2022 as of 2 November.
On the date of publication, William White 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. Don’t forget, too, that Meta also continues to make progress monetizing other new applications/products, such as its Reels short-form video application. Part of it may be the realization of the savings CEO Mark Zuckerberg was looking for when Meta announced layoffs in November. During that announcement, he also noted that the company would reduce its real estate footprint and eliminate some employee perks to save cash.
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It’s also a 3% increase compared to the $27.91 billion reported in Q1 2022. Investors will need to decide whether they are willing to weather the volatility inherent in tech stocks or make a bet on the future of the metaverse before investing in Meta. If virtual reality and the metaverse become a major part of life over the next decade, Meta is well-positioned to have a huge role in it given its early entry into the space. Meta is a company that needs to prove itself as it changes directions toward the metaverse, but if you buy the story behind it, it’s hard not to like the stock at this price. This quarter was the first under Meta’s new reporting structure, where it pulled its social media platforms and metaverse segments apart, showing how they each stand on their own.
Stock Market News for Oct 13, 2023
What’s more, Meta’s top and bottom lines are expected to head higher in 2024 as well, as seen in the chart below. At Leads From Gurus, we strive to achieve sweet returns by predicting which companies would report unexpected earnings. Finally, people are increasingly becoming concerned about their physical and mental health, as well as their lifestyle choices.
Meta Stock
If the stock merely maintains its current earnings multiple, that implies a valuation of around $486 per share. However, in time, if this alternative revenue model proves successful, the company could launch it in other regions, including the United States. Even after a triple-digit run higher, Meta Platforms continues to trade at a reasonable valuation of 24.3 times forward earnings. Such a multiple is sustainable, even in a period of elevated interest rates, for two reasons.
According to Citi, the total addressable market for the metaverse could be $8trn-$13trn by 2030, while the number of users could rise to five billion, or 65% of the global population. What should this social media stock expect, considering the current environment and the management’s plans review the no-spend challenge guide to reshape its business model? In this article, we analyse the latest Meta Platforms stock news along with its price action and fundamentals to outline plausible META stock projections for 2022 and beyond. This is above the $27.66 billion that analysts were looking for this quarter.
That would be the lowest rate of growth in the last decade and the first below double digits. You must also remember that markets are volatile, and that past performance is no indication of future returns. It’s crucial to do your own research to form an opinion of a company’s performance and the likelihood of achieving analysts’ targets.
Why wouldn’t a company that has billions of users and the capabilities to collect so much data not be at the forefront of AI innovations? Meta is in a prime position to benefit as this new technology becomes even more prevalent in our society. And this could provide greater financial upside when it comes to revenue and earnings potential.