Meta Platforms, Inc. (NASDAQ: $META) is a multinational tech conglomerate based in Menlo Park, CA, that owns and operates popular social media platforms such as Instagram, WhatsApp, Facebook, and Threads.
It generates its revenue mainly through selling ad placements to reach people based on factors such as age, location, gender, behavior, and interests. It operates in Africa, Europe, the Middle East, Asia-Pacific, and the Americas.
Meta Soars in 2024
Since the start of 2024, Meta Platforms (META) has experienced a meteoric rise. It is up 47.15% year-to-date, outperforming the S&P 500. Over the past 12 months, the stock is up 151.22%, compared to the 31.59% gain of the S&P 500. Despite the gains it has made in a relatively short time, there is room for growth.
Drivers of Future Growth
In 2022, investors were critical of CEO Mark Zuckerberg for burning through cash to invest in Reality Labs, which was working on VR, ART, and a metaverse. At the time, investors did not see the use of such technologies.
However, the rise of AI could be a game changer, providing a clearer path to Zuckerberg’s vision. Meta is working on an AI platform, Ego, which they plan to integrate into AR glasses. The technology could have numerous applications, allowing users to interact with the real world in a simplified manner. For instance, it could be used to make real-time interpretations of a foreign language and to learn new skills.
Meta also has one of the biggest caches of raw content. With twenty years of data from billions of users worldwide, Meta could create a new revenue stream just by selling access to training data. It could also use its data to train in-house AI models and leap ahead of existing frontrunners.
Besides working on the future, Meta is doing quite well in its current operations. Its ad business continues to rise, with the company posting a record 24% Y/Y increase in sales to $38.7 billion in Q4 fiscal 2023. The company also reported a 41 % operating margin, making it a cash-generation behemoth.
While Reality Labs is still burning through billions in cash, Meta Platforms is more than capable of absorbing the loss in the short term. Meta has a huge cash pile with $65.4 in total cash at the end of Q4, while its long-term debt was $18.4 billion, placing it in a position to do whatever it wants with its cash.
Meta Stock Performance
As of the last closing price, META is trading at $509.58 per share, up 47.15% YTD, and up 151.22% in the past 12 months. It is trading close to its 52-week high of $523.57 and above its 52-week low of $197.90. The stock is above both its 50-day, and 200 day moving averages, which are $455.12 and $347.3, respectively. It has a forward P/E ratio of 25.32, which while high, is a fair valuation for a company leading the AI revolution.
Is Meta At its Peak?
Meta was not doing well in 2022, as it announced a drop in revenue for the fiscal year. However, it began to turn things around in 2023 after cost cuts, leading to record revenue growth in fiscal 2023. Meta also announced that it would begin issuing quarterly dividends, which pushed the stock price higher.
Based on its quick turnaround, many have concluded that Meta is at its peak. However, that might not be the case. Meta has been quick to embrace AI and is already investing billions of dollars in research. AI is expected to grow at a CAGR of 15.83%, reaching $738.80 by 2030, according to Statista. Meta aims to capture a sizable chunk of the market, which will drive growth. As such, Meta is not at its peak.
Meta Goes Green
At the start of March 2024, Arevon Energy announced that it had entered into a deal with Meta Platforms to supply clean energy. The solar power plant, located in Scott County, Missouri, will generate 349 megawatts of power, supporting Meta’s operations in the region.
Is Meta A Buy?
Meta is a buy based on its performance in the past few years. For instance, its ad revenue has grown at a CAGR of 44% since 2009, while since 2019, its ad revenue has doubled. While it experienced a slight hiccup in 2022, the CEO has turned things around, and Meta Platforms is on the path to growth once again.
Despite the current macroeconomic headwinds, digital advertising is not slowing. Analysts forecast that digital advertising will be worth $1 trillion in 2028, up from the current $740 billion. Meta already holds a huge chunk of that market and will continue growing as digital ad spending rises. Consequently, while Meta has a valuation of $509.58 per share, with a market cap of $1.30 trillion, it still has room to grow bigger.
Disclaimer: This website provides information about cryptocurrency and stock market investments. This website does not provide investment advice and should not be used as a replacement for investment advice from a qualified professional. This website is for educational and informational purposes only. The owner of this website is not a registered investment advisor and does not offer investment advice. You, the reader / viewer, bear responsibility for your own investment decisions and should seek the advice of a qualified securities professional before making any investment.
One thought on “Meta Platforms (NASDAQ: $META) Soars 47%+ YTD to Over $500 – Is It Still a Buy?”
Comments are closed.