FB: Where will Meta stock go next? Wall Street analysts share their targets
Since the start of the new year, Meta has seen gains in its stock price, leaving many investors to wonder why. CFRA analyst Angelo Zino upgraded his price target for Meta from $300 to $350 on Thursday thanks to the expectation the company “will find success penetrating” the text-based social media space. 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. Expenses increased due to higher R&D spending, which Mark Zuckerberg made clear was coming when he announced the company’s name change to Meta. As I have noted previously, this comeback for shares in the Facebook and Instagram parent has been driven by success with cost-saving measures.
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. Since Alphabet is a direct competitor of Meta, its results are likely more influencing Meta’s performance than Microsoft’s.
The social media giant is shifting its focus to the metaverse.
Investors have been driving down tech stocks lately as they worry about inflation, which is currently at a 40-year high. Technology stocks like Meta, in particular, have suffered as investors view the sector as riskier compared to other investments. Mark Zuckerberg’s company recorded its biggest daily market gain in nearly a decade, as the mood brightens among tech investors. Analysts expect Meta Platforms’ earnings to increase at an annual rate of 21% for the next five years. However, the secular growth of its end market and the addition of new revenue opportunities due to the metaverse could help it grow at a faster pace. So, Meta Platforms can unlock an entirely new advertising opportunity with the metaverse, where marketers can spend money on ad space within the virtual world.
If Meta controls a quarter of the digital ad market by then, its ad revenue could increase to $196 billion annually, up 70% from last year’s levels. By 2030, digital ad spending is expected to jump to almost $1.5 trillion, indicating that Meta’s ad revenue could more than triple in the next eight years. According to 42 stock analysts, the average 12-month stock price forecast for Meta Platforms stock is $324.52, which predicts an increase of 7.58%.
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If the company can beat those estimates, the stock could soar tomorrow. 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 https://bigbostrade.com/ Eternals out in movie theaters right now. And as long as marketers keep seeing healthy returns on their investments in advertising on Meta’s family of apps, they will keep up the spending. According to market research firm eMarketer, advertisers spent nearly $492 billion on digital ads last year.
- When Meta Platforms released its 2021 full-year earnings report, there were two key reasons its stock plunged.
- This means that Meta’s share of the digital ad market stood at just over 23% as the company had generated $115 billion in ad revenue in 2021.
- Meta is intentionally moving beyond being a social media company, so owning the stock means that you are buying into the company’s metaverse plans.
- And as long as marketers keep seeing healthy returns on their investments in advertising on Meta’s family of apps, they will keep up the spending.
Nearly all of the revenue Meta generates comes from ad revenue, and in the last decade, it compounded annual revenue at a rate of 45.8%. Meta’s social media business is doing quite well, though the revenue growth rate has decelerated in four consecutive years. That could be one reason that prompted the company to announce an aggressive investment into building its metaverse. When Meta Platforms released its 2021 full-year earnings report, there were two key reasons its stock plunged.
Alongside this factor, there are other potential tailwinds/growth catalysts. As Louis Navellier recently discussed, Meta, which has already built-out its artificial intelligence (AI) infrastructure, may be able to quickly capitalize on this emerging trend. By that time, who knows how much bigger, and better, ChatGPT might have grown. If inflation continues to persist at elevated levels, the Federal Reserve will continue to raise the federal funds rate. And investors have been concerned that aggressive moves by the Fed to push down inflation could end up severely hurting the economy. Meta has also downsized its staff by a hefty 13%, though this most recent quarter doesn’t factor in those 11,000 jobs that the company cut in November.
The day before the IPO execs announced it would sell 25% more stock than it had previously stated because of the high demand. The company wound up raising more than $16 billion making it the 3rd largest IPO in history at the time. Shares of Meta inched up nearly 1% in early trading, moving against broader market losses and are on their way to their highest close since last February. 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.
The family of Apps includes Facebook and all the other digital applications. This segment produces virtually all of the revenue which is in turn 97% advertising oriented. Reality Labs develops and markets a line of virtual and augmented-reality products. The massive IPO valuation earned Facebook a spot in the S&P 500 in the first year of its public life. Although its valuation has deteriorated in the wake of scandal and consumer trends within social media, early investors were treated to gains in excess of 1000% at the peak of the stock run.
- Reels currently monetizes at a slower pace than older and more established products like the news feed and Stories.
- The expense is sure to be high, but the reward may be worthwhile, as CEO Mark Zuckerberg aims to have 1 billion users in the metaverse in roughly a decade.
- The massive IPO valuation earned Facebook a spot in the S&P 500 in the first year of its public life.
- Nevertheless, the company’s core social media business is experiencing robust user and revenue growth at a massive scale.
- Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.
The Journal reported that Meta could release the model, which is expected to be significantly more powerful than the company’s recently released Llama 2 AI, at some point next year. The news comes as the company seeks to catch up with its rivals, with Big Tech companies scrambling to develop their own AI models. The digital advertising sector as a whole has seen growth slow because of a broader pullback in demand over concerns about a recession, so Alphabet’s results could harken a recovery for the overall industry. As The Wall Street Journal reported last night, Meta is developing a new artificial intelligence (AI) system capable of going toe-to-toe with ChatGPT.
Here’s How Much Meta Stock Could Surge Thanks To Twitter Rival Threads
But that’s expected to reverse quickly, with a return to growth in 2023 that should leapfrog its 2021 earnings result. Meta Platforms’ stock is owned by a variety of retail and institutional investors. Ltd Zurich (30.35%), BlackRock Inc. (6.05%), State Street Corp (3.44%), Geode Capital Management LLC (1.71%), Capital World Investors (1.44%) and Capital International Investors (1.39%). Click the link below and we’ll send you MarketBeat’s list of ten stocks that will drive in any economic environment.
META stock is up 14.7% as of Thursday morning and is up 67.9% since the start of the year. Meta Platforms has made major progress turning itself into a lean, mean, profit-making machine. Even so, this positive shift in the underlying story with the company may be poised to continue playing out.
More than a quarter of the world’s population checks in on one of Meta’s apps daily. Meta stock has bounced up by 18% over the last ten days, and investors might be wondering if it had already hit bottom when shares plunged to a 52-week low of $185.33 earlier this month. The rally arrested an overall decline of 51% since September 2021 amid disappointment about the company’s full-year earnings report and the broader tech market sell-off.
Things are also looking good for META stock considering its outlook for the second quarter of 2023. This has it expecting revenue to range from $29.5 billion to $32 billion. To put that in perspective, Wall Street’s revenue estimate is sitting at $29.53 billion. On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Meta Platforms envisions users existing as virtual avatars of themselves, surrounded by a self-sustaining digital economy that could feature all the popular brands we engage with in the real world. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. The stock now trades at a price-to-earnings ratio of just 17, which seems like a bargain for a company with the global reach and massive free cash flows that Meta produces.
On Wednesday, Facebook’s parent reported meager revenue growth of 3% from a year earlier, which was better than analysts were expecting. Before that, Meta had reported three straight quarters of sales declines, underscoring the social media company’s challenges coping with a slowdown in digital ads. Meta Platforms finished 2021 with annual revenue of $118 billion, an increase of 37% over the prior year. The advertising business was the key driver of this impressive growth as it accounted for 97% of the company’s top line.
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MarketRank is calculated as an average of available category scores, with extra weight given to analysis and valuation. The fines related to publicly exposing the phone numbers of children who were users of Instagram center of gravity indicator and allowing for the details of individual users to be scraped from Facebook. By October, fewer than 200,000 people had used Horizon Worlds, far below target, and many saw the service as being doomed to fail.
The company was founded by Mark Zuckerburg and a group of friends but now only Zuckerburg remains. The company quickly grew and expanded into other universities and then opened itself to the public in 2006. As of 2006, anyone over the age of 13 can be a Facebook user which is the company’s primary source of income. As of 2022, the company claimed more than 2.9 billion monthly active Facebook users. When the company announced Q1 earnings in February 2022, it made headlines by going through the largest single-day valuation drop in US stock market history, losing $237 billion overnight.
The latest in its rivalry with TikTok may also signal a growth resurgence for Meta’s flagship platforms. The rollout of the Reels feature on Facebook and Instagram has already resulted in increased engagement. With this, the company is now starting to “cash the check” by monetizing this feature. However, while improvements to fiscal discipline are already likely reflected in Meta’s valuation, don’t assume that it’s middling returns from here following a “one and done” comeback for the stock. The AI will reportedly be primarily aimed at businesses as a tool for producing text and analysis. This is similar to ChatGPT enterprise, the business tier of OpenAI’s highly successful chatbot, which launched last month.
Upgrade to MarketBeat All Access to add more stocks to your watchlist. The company is scheduled to release its next quarterly earnings announcement on Wednesday, October 25th 2023. Today, Meta develops digital applications that allow people to connect with family, friends, businesses, and merchants through Internet connections.
Moderate success in AI, with Reels, and even with its metaverse efforts could help the company hit the high-end of analyst earnings forecasts for the next two years. This would undoubtedly benefit Meta Platforms, both in terms of market share and revenue. Having said this, a continued surge for META doesn’t hinge on an outright TikTok ban in the U.S. The aforementioned catalysts are likely enough to drive further gains, even if they fail to fully play out. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.
It operates through the Family of Apps (FoA) and Reality Labs (RL) segments. The FoA segment consists of Facebook, Instagram, Messenger, WhatsApp, and other services. The RL segment includes augmented and virtual reality related consumer hardware, software, and content. The company was founded by Mark Elliot Zuckerberg, Dustin Moskovitz, Chris R. Hughes, Andrew McCollum, and Eduardo P. Saverin on February 4, 2004, and is headquartered in Menlo Park, CA. Though it is not a massive increase in the company’s stock price, beating the market average, especially after its dismal 2022, is important for Meta. The company hopes to regain some of its losses by continuing the growth of its metaverse services and through the cost savings realized by its large wave of layoffs in late 2022.
Meta was a $900 billion company when earnings came out; you rarely see stocks this big make such a dramatic move. The Facebook parent now has a market cap of $546 billion, which is a sharp decline from its $1 trillion-plus market cap just six months ago. 52 Wall Street research analysts have issued “buy,” “hold,” and “sell” ratings for Meta Platforms in the last year. There are currently 2 sell ratings, 5 hold ratings, 44 buy ratings and 1 strong buy rating for the stock. The consensus among Wall Street research analysts is that investors should “moderate buy” META shares.
The segment’s growth last year was driven by a 10% increase in ad impressions over 2020, as well as a 24% increase in the price per ad. For starters, economic conditions, which have negatively affected digital advertising demand since last year, could normalize over the next few quarters. This alone could get Meta Platforms back to its high-water mark of profitability.
This is above the $27.66 billion that analysts were looking for this quarter. It’s also a 3% increase compared to the $27.91 billion reported in Q1 2022. While the next potential triple-digit move for shares may take some time to play out, META stock remains a strong opportunity for growth investors.