Meta Soars by Most in Decade, Adding $100 Billion in Value The New York Times
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. According to market research firm eMarketer, advertisers spent nearly $492 billion on digital ads last year.
- Investors will need to consider all of the risks and advantages before they start buying shares.
- Mark Zuckerberg’s decision to rename his company Meta Platforms will go down as one of the silliest ideas in American corporate history, right up there with New Coke and the Ford Edsel.
- 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.
- The Meta Platforms share price forecast remains largely bullish according to the algorithmic forecast.
- Meta Platforms issued an update on its third quarter 2023 earnings guidance on Wednesday, July, 26th.
The value of shares and ETFs bought through a share dealing account can fall as well as rise, which could mean getting back less than you originally put in. Meta Platforms’ (META) stock performance has seen little respite in the bearish environment so far this year. After a mass sell-off in late October, stock sank 24% to the lowest price since 2016.
The social media giant is shifting its focus to the metaverse.
She highlighted “stabilization” in key advertiser segments like online commerce and gaming. CFO Susan Li noted that revenue declined 4.5% in last year’s third quarter. In February 2022, Meta revealed just how big of a revenue hit Apple’s privacy shift would deliver, $10 billion in 2022 alone, amounting to about $2.5 billion per quarter. 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.
- Meta is expected to ink some $15 billion in free cash flow in 2022, according to estimates from Refinitiv, a 60% decline from 2021, in large part because of spending on the virtual universe.
- Meta earnings increased 21%, breaking a six-quarter streak of declines.
- But that’s expected to reverse quickly, with a return to growth in 2023 that should leapfrog its 2021 earnings result.
- The day before the IPO execs announced it would sell 25% more stock than it had previously stated because of the high demand.
- Despite being free for users, Meta has grown its operating income from $538 million to $46.7 billion from 2012 to 2021.
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 Mt5 indicators one reason that prompted the company to announce an aggressive investment into building its metaverse. Meta also unveiled its new Quest 3 virtual-reality headset and an array of nifty generative AI tools to give users more reason to spend time on Facebook and Instagram.
Analysts predict Meta Platforms’ earnings will contract by 10% in 2022 to $12.49 per share, given some of the abovementioned challenges. But that’s expected to reverse quickly, with a return to growth in 2023 that should leapfrog its 2021 earnings result. Zuckerberg also explained his own vision for AI, seeing not one dominant chatbot, like ChatGPT, but a number of specialized AI tools, depending on what the user needs them for. The company introduced Meta AI as a general-purpose assistant and sees individuals or businesses using its tools, like Llama, to build their own AIs. Morgan Stanley observes that Meta Connect has demonstrated remarkable technological advancements by harnessing the power of AI to create innovative use cases and potential avenues for monetization.
The Meta Quest 3 starts at $499.99 compared to the Vision Pro at $3,500. After whipsawing in the afternoon, Meta stock closed today’s session down 0.4%. Sign up to receive the latest news and ratings for META and its competitors with MarketBeat’s FREE daily newsletter. Meta gains ground in digital engagement and advertising budgets while maintaining cost discipline.
Alphabet reported a modest 0.2% revenue decline in its advertising business, but that was an improvement from a 3.6% decline in the fourth quarter, another positive sign for Meta. Rather than make Meta shareholders collectively pay for Zuckerberg’s ambitions, he could fund them himself through dividends from the parent company. If all the cash flow from operations went back to shareholders, representing about $18 a share, Zuckerberg would find himself with some $6 billion to reinvest in the project based on his stake. That’s not enough given current spending plans, but a few key investors who sign on to his vision might be keen to invest alongside him. Meta is expected to ink some $15 billion in free cash flow in 2022, according to estimates from Refinitiv, a 60% decline from 2021, in large part because of spending on the virtual universe. But cash flow from Meta’s operations alone – mostly the business without spending on the metaverse – would represent a yield of 15%.
We’ll learn more when Meta releases its first-quarter earnings report after hours today. 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. best pairs to trade forex If the company can beat those estimates, the stock could soar tomorrow. Since Alphabet is a direct competitor of Meta, its results are likely more influencing Meta’s performance than Microsoft’s.
It is not surprising to see why Meta’s growth rate is expected to improve in the coming years. The company had a daily active user base of 1.9 billion in December 2021. Its monthly active user base stood at 2.9 billion at the end of last year. This huge user base makes Meta an ideal avenue for advertisers to spend their dollars and reach a wide audience. Investors may also be intrigued by the company’s investment in technologies like the metaverse. Though it has been, thus far, largely panned, there’s no telling what the future holds, especially when it comes to technology.
As a result, the metaverse could create another sphere for digital marketers to target. Bloomberg estimates that the global metaverse market could generate $800 billion in revenue by 2024, while another estimate puts the size of the market at $1.6 trillion by 2030. All of this indicates that the metaverse could be the next growth frontier for Meta Platforms.
The economic effects of the coronavirus pandemic and the government’s response to it has spurred an ugly bout of outsized inflation. The Federal Reserve is working to get it back under control by raising interest rates. Asset prices are typically inversely related to interest rates and growth stocks like Meta Platforms tend to experience the inverse relationship by a larger magnitude. More of the value of the stock is derived from cash flows in later years, which is subject to a bigger discount when interest rates rise. The forces mentioned above have combined to reduced Meta’s stock price by 50% off its highs hit in September 2021. 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.
Market Clubhouse Morning Memo – September 29th, 2023 (Trade Strategy For SPY, QQQ, AAPL, MSFT, META, GOOGL, And NVDA)
Of 50 financial services companies rating the stock, 29 gave it a ‘buy’ rating, 18 ‘hold’ and three suggest a ‘sell’. What should this social media stock expect, considering the current environment and the management’s plans 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. When it comes to revenue, Meta Platforms brought in $28.65 billion.
Mark Zuckerberg will split Meta, take the ‘verse
However, following a 15% rally on Thursday to over $241, Meta’s shares are up 170% since bottoming at under $89 in November. On 26 October 2022, Meta Platforms reported its financial results covering the third quarter of the 2022 fiscal year. Meanwhile, macroeconomic conditions in the US have worsened amid a high inflation rate of 8.2% which has prompted a risk-off attitude among market participants.
The company is scheduled to release its next quarterly earnings announcement on Wednesday, October 25th 2023. 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. As for Meta’s pivot to the nascent virtual world of the metaverse, the project continues to bleed cash. The Reality Labs division, responsible for developing software and hardware for the metaverse, lost $3.99 billion in the first quarter after losing $13.72 billion in 2022. It’s crucial to do your own research to form an opinion of a company’s performance and the likelihood of achieving analysts’ targets. The losses in its Virtual Reality (VR) division hit $2.8bn in the second quarter, even as its virtual reality hardware and software sales continue to grow.
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. Increasing efficiency improves the return on investment markets get on ad spending. For instance, if a person reveals their favorite kot forex movie features Marvel’s Avengers, that is likely an ideal candidate to send ads for Marvel’s 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.
During that announcement, he also noted that the company would reduce its real estate footprint and eliminate some employee perks to save cash. Shares of Meta closed up 5% Wednesday after the company announced it will lay off more than 11,000 employees. Get this delivered to your inbox, and more info about our products and services. “Meta successfully ‘passed the baton’ from cost cuts to revenue re-acceleration,” the analysts wrote. Even with the hot start to the year, Meta shares are still about 37% below their record high from September 2021. They lost two-thirds of their value last year, as the company reckoned with by far its toughest stretch since its IPO a decade earlier.