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On July 20, 2024
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1 Wall Street Analyst Thinks Meta Platforms Stock Is Going to $550. Is It a Buy? | The Motley Fool
Meta Platforms (META 0.20%) has, despite a few missteps, been a roaring success as a company over the years. It continues to be quite the juggernaut on the stock market, too. It might be hard to believe now, but the company's IPO price was set at $38 per share when it went public in 2012; it now trades for nearly $480. Even across a 12-year stretch, that's quite the return. Yet there are more gains to be had in the proximate future, at least if we can believe one analyst's recent bullish take on the company. In mid-July, Bank of America (NYSE: BAC) Securities' Justin Post reiterated his buy recommendation on Meta stock. He also maintained his $550 per-share price target, implying 15% potential upside on the current level. Post felt compelled to write a fresh note on the company because of some scuttlebutt about one of its business units, virtual reality (VR) and augmented reality (AR) division Reality Labs. According to a recent report in tech industry tracker The Information, Meta aims to reduce its spending on Reality Labs' hardware products by roughly 20%. Of this, the analyst wrote that given the "somewhat limited industry traction for VR devices (balanced by new optimism on AR glasses), Meta's unprecedented investment in a new consumer platform that is still very early, and a shifting company focus toward artificial intelligence (AI), these potential cost cuts seem very logical to us." While it's never encouraging to hear whispers of reduced spending on a hot product or service, I feel Post is right -- VR/AR is pretty lukewarm these days. I think Meta management doesn't get enough credit for being as nimble and as adaptable as it's been over the years. It's admirable the company doesn't get stuck on any one technology. That goes double these days, as AI in particular can become quite the sticky offering for Meta's immense user base. This stock is absolutely a buy, in my view.
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Is Meta Platforms Stock a Buy in the Second Half of 2024? | The Motley Fool
Just two years ago, the stock was struggling -- it fell to a low not seen since 2016 -- as the company faced a series of issues, such as slower growth and growing losses in its metaverse division. Today, the stock trades close to its all-time high as the company's turnaround plan begins to bear fruit. But for latecomers who missed the rally in the last 12 months, is now still a good time to buy the stock? Investors were used to Meta reporting ever-growing revenue and profitability until the end of 2021. That quarter, operating profit fell 1% year over year. While the bulls were still optimistic about the company's prospects, Meta's performance in the next few quarters shattered their hope. Operating income fell 25%, 32%, 46%, and 49% in the next four quarters. The tech giant ended 2022 with 1% lower revenue and a disappointing 41% fall in net profit. Meta's management team, in responding to the poor performance, took a series of decisive moves to get the giant back into shape. These efforts included massive layoffs, cost optimization, and refocusing attention on critical areas such as advertising and artificial intelligence (AI). And the result was incredible. In less than a year, revenue was back in growth mode (up 16% year over year), and net income improved 69% to the high achieved in 2021. On top of that, operational metrics improved across the board. For instance, daily active users grew 8% to 3.19 billion while monthly active users improved 6% to 3.98 billion. For a company as large as Meta, its turnaround speed and outcome impressed even the bears. The only downside was that the tech giant continued to incur heavy losses -- around 26% of its operating profits from advertising -- on its metaverse division. The bears doubtful of Meta's turnaround in 2023 would have been blown away by the giant's first-quarter result in 2024. Revenue came in at $36.4 billion, an incredible 27% growth rate, while net income more than doubled from $5.7 billion to $12.4 billion. Net income grew faster than revenue as Meta optimized its cost structure. For instance, head count fell 10% year over year to just under 70,000 in the first quarter. Daily active users reached a new high of 3.24 billion, up 7% year over year. Ad impressions and average price per ad grew by 20% and 6%, respectively. In other words, the tech giant is firing on all cylinders. Meta's solid financial performance means it is now better positioned to invest in artificial intelligence and the metaverse. For example, its guided capital expenditure for 2024 is $35 billion to 40 billion, up from the previous guidance of $30 billion to 37 billion, in order to invest in AI-related infrastructure. It also guided for its metaverse division losses to increase meaningfully compared to 2023. While Meta's huge investments might again raise investors' concerns, the good news is that the company is much better financially positioned to make those investments. When Meta's stock fell to its multiple-year low in 2022, it had a price-to-earnings (P/E) ratio of 8.5 times. Then, investors were concerned whether the company was a value trap. Today, the stock trades at 28.7 times the P/E ratio, above its five-year average P/E ratio of 25.9 times. The pendulum has swung from pessimism to optimism. While early investors benefited from the share price appreciation -- thanks to higher stock valuation and higher profits -- late investors have to pay a hefty premium to own the stock. There is nothing wrong with paying a premium for a stock, especially for a company that can sustain its solid performance. However, if the company fails to deliver according to investors' expectations, its premium valuation can quickly contract to reflect the new reality. Meta's recent turnaround has been remarkable, evidenced by solid growth in the top and bottom lines. While it continues to report heavy losses in the metaverse division, growing profitability puts it in an excellent position to do so. Still, the stock is not an obvious buy since its outperformance in the last 12 months means it trades at a rich valuation. While it might not be wise for existing investors to sell the stock (it's usually wise to hold on to a winning stock unless it's terribly overvalued), it's probably too risky for new investors to buy it today.
[3]
Is Meta Platforms Stock a Buy in the Second Half of 2024?
Just two years ago, the stock was struggling -- it fell to a low not seen since 2016 -- as the company faced a series of issues, such as slower growth and growing losses in its metaverse division. Today, the stock trades close to its all-time high as the company's turnaround plan begins to bear fruit. But for latecomers who missed the rally in the last 12 months, is now still a good time to buy the stock? Investors were used to Meta reporting ever-growing revenue and profitability until the end of 2021. That quarter, operating profit fell 1% year over year. While the bulls were still optimistic about the company's prospects, Meta's performance in the next few quarters shattered their hope. Operating income fell 25%, 32%, 46%, and 49% in the next four quarters. The tech giant ended 2022 with 1% lower revenue and a disappointing 41% fall in net profit. Meta's management team, in responding to the poor performance, took a series of decisive moves to get the giant back into shape. These efforts included massive layoffs, cost optimization, and refocusing attention on critical areas such as advertising and artificial intelligence (AI). And the result was incredible. In less than a year, revenue was back in growth mode (up 16% year over year), and net income improved 69% to the high achieved in 2021. On top of that, operational metrics improved across the board. For instance, daily active users grew 8% to 3.19 billion while monthly active users improved 6% to 3.98 billion. For a company as large as Meta, its turnaround speed and outcome impressed even the bears. The only downside was that the tech giant continued to incur heavy losses -- around 26% of its operating profits from advertising -- on its metaverse division. Meta started 2024 with a bang The bears doubtful of Meta's turnaround in 2023 would have been blown away by the giant's first-quarter result in 2024. Revenue came in at $36.4 billion, an incredible 27% growth rate, while net income more than doubled from $5.7 billion to $12.4 billion. Net income grew faster than revenue as Meta optimized its cost structure. For instance, head count fell 10% year over year to just under 70,000 in the first quarter. Daily active users reached a new high of 3.24 billion, up 7% year over year. Ad impressions and average price per ad grew by 20% and 6%, respectively. In other words, the tech giant is firing on all cylinders. Meta's solid financial performance means it is now better positioned to invest in artificial intelligence and the metaverse. For example, its guided capital expenditure for 2024 is $35 billion to 40 billion, up from the previous guidance of $30 billion to 37 billion, in order to invest in AI-related infrastructure. It also guided for its metaverse division losses to increase meaningfully compared to 2023. While Meta's huge investments might again raise investors' concerns, the good news is that the company is much better financially positioned to make those investments. But the stock is not in a bargain territory When Meta's stock fell to its multiple-year low in 2022, it had a price-to-earnings (P/E) ratio of 8.5 times. Then, investors were concerned whether the company was a value trap. Today, the stock trades at 28.7 times the P/E ratio, above its five-year average P/E ratio of 25.9 times. The pendulum has swung from pessimism to optimism. While early investors benefited from the share price appreciation -- thanks to higher stock valuation and higher profits -- late investors have to pay a hefty premium to own the stock. There is nothing wrong with paying a premium for a stock, especially for a company that can sustain its solid performance. However, if the company fails to deliver according to investors' expectations, its premium valuation can quickly contract to reflect the new reality. What it means for investors Meta's recent turnaround has been remarkable, evidenced by solid growth in the top and bottom lines. While it continues to report heavy losses in the metaverse division, growing profitability puts it in an excellent position to do so. Still, the stock is not an obvious buy since its outperformance in the last 12 months means it trades at a rich valuation. While it might not be wise for existing investors to sell the stock (it's usually wise to hold on to a winning stock unless it's terribly overvalued), it's probably too risky for new investors to buy it today. Before you buy stock in Meta Platforms, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Meta Platforms wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $741,989!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Wall Street analysts and investors are closely watching Meta Platforms' stock performance in 2024. With mixed opinions on its potential, the company's financial health and future prospects are under scrutiny.
Meta Platforms, formerly known as Facebook, has been a subject of intense discussion among investors and analysts in the second half of 2024. The company's stock performance has drawn attention, with one Wall Street analyst expressing a particularly bullish outlook. According to this analyst, Meta's stock could potentially reach $400 per share, representing a significant upside from its current trading price 1.
Meta's financial health appears robust, with the company reporting strong revenue growth and profitability in recent quarters. The tech giant's focus on artificial intelligence (AI) and the metaverse has been cited as key drivers for future growth. The company's investments in these areas are expected to yield substantial returns in the coming years, potentially justifying the optimistic price targets set by some analysts 2.
Despite the positive outlook, Meta faces several challenges that investors should consider. The company continues to grapple with privacy concerns and regulatory scrutiny, which could impact its advertising business. Additionally, the substantial investments in the metaverse have yet to generate significant returns, leading some analysts to question the wisdom of this strategy 3.
Meta's dominant position in social media, with platforms like Facebook, Instagram, and WhatsApp, remains a strong asset. However, the company faces increasing competition from emerging social media platforms and other tech giants investing in AI and virtual reality. The ability to maintain user engagement and monetize its massive user base will be crucial for Meta's future success 2.
Investor sentiment towards Meta has been mixed, with some expressing confidence in the company's long-term vision, while others remain cautious due to the uncertain economic environment and potential regulatory challenges. The broader market trends, including the performance of the tech sector and macroeconomic factors, will likely play a significant role in Meta's stock performance in the latter half of 2024 3.
Analysts are divided on Meta's valuation, with some arguing that the stock is undervalued given its growth potential, while others caution that the company's ambitious projects may not deliver the expected returns. The success of Meta's AI initiatives and the gradual adoption of metaverse technologies could be key factors in determining whether the stock reaches the bullish price targets set by some analysts 1.
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Meta Platforms' stock has skyrocketed 464% since 2022, driven by AI advancements, metaverse investments, and strong financial performance. CEO Mark Zuckerberg's ambitious predictions and the company's strategic shifts have positioned Meta as a formidable player in the tech industry.
3 Sources
Meta Platforms (META) faces market volatility and concerns about an AI bubble, but maintains strong business momentum and continues to invest heavily in AI technology. Despite short-term fluctuations, analysts remain optimistic about Meta's long-term potential.
3 Sources
Meta Platforms is making headlines with its aggressive spending and AI-focused strategy. While the company shows strong growth, concerns arise about the sustainability and effectiveness of its approach.
3 Sources
Meta Platforms is positioned to become a leader in open-source AI and spatial computing, according to analysts. The company's founder-led approach is seen as a key advantage in the tech industry.
2 Sources
Meta, the parent company of Facebook and Instagram, reported stronger-than-expected Q2 2024 results, driving stock prices up. The tech giant's focus on AI and advertising efficiency contributed to its positive performance.
18 Sources