Zina Kumok
Updated on: October 13, 2024 12:24 am GMT
The stock market is buzzing about Meta Platforms (META), which has seen a remarkable rise over the past year. After surging 74%, the question on many investors’ minds is whether it’s still a smart time to invest in the tech giant. With its innovative approach and strong financial performance, Meta could have even more potential ahead.
Impressive Performance and Market Position
Meta Platforms has outpaced the broader market, particularly the Nasdaq-100, which only saw a 22% increase during the same period. The company’s robust growth in revenue and earnings has been a significant factor in its success. Here are some highlights of Meta’s performance:
- Stock gain: 74% in the past year
- Revenue growth: Up 25% year-over-year to $75.5 billion for the first half of 2024
- Adjusted earnings: Increased by 90% year-over-year to $9.86 per share
This performance comes as Meta is gaining ground in the lucrative digital advertising market, bolstered by its adoption of artificial intelligence (AI). Such advancements have allowed the company to offer better targeting and ad placements for advertisers, enhancing overall effectiveness.
Analyst Expectations
According to analysts, Meta’s stock still holds promise. A survey of 68 analysts revealed:
- Median 12-month price target: $575, indicating a potential 9% increase from current levels.
- 85% of analysts rate Meta as a “buy.”
- Street-high price target: $660, suggesting a 25% price jump.
Looking deeper, Meta’s revenue growth for 2024 is expected to surpass previous estimates of $161.6 billion, driven by its impressive performance in the first half of the year. With the digital advertising market projected to grow by 12.2% in 2024, Meta appears well-positioned to continue leading the charge.
Why Advertisers Choose Meta
The reason advertisers are turning to Meta in droves is linked to its advanced AI tools. These tools have proved crucial in enhancing returns on ad spending. Here’s how Meta is driving these improvements:
- Over 1 million U.S. advertisers reported a 12% increase in returns since 2022.
- AI-driven ad placement has optimized audience targeting on its platforms.
- In the second quarter of 2024, ad impressions across Meta’s applications grew by 10% from the year before.
The integration of AI not only assists advertisers but also enriches users’ experiences on Meta’s platforms, suggesting significant long-term growth potential.
Outlook for Future Growth
With continued investment in AI and digital tools, Meta is poised for further expansion. Forecasts indicate:
- Ad market growth: Expected to grow by 11.4% in 2025 and 10.4% in 2026.
- Meta’s earnings are projected to grow significantly, with estimates suggesting earnings per share (EPS) could reach $27.97 in a few years.
If Meta trades at its current earnings multiple of 26, this would lead to a potential stock price of $727—an impressive 38% increase from current levels.
Risks and Considerations
Despite its promising outlook, investors should be cautious. The tech sector can be volatile, and while Meta’s growth has been strong, external market factors can affect performance. Some possibilities to consider include:
- Market competition: New players may emerge in the digital ad space.
- Economic fluctuations: Broader economic issues could impact advertising budgets.
- Technological changes: Rapid developments in technology could shift user behavior.
However, Meta’s strategic positioning and recent performance suggest it could mitigate these risks effectively.
Conclusion: Is It Too Late to Buy?
For potential investors, the chance to buy Meta stock remains enticing. With a favorable price-to-earnings (P/E) ratio of 26, which is below the technology sector average of 44, Meta offers attractive value. Moreover, its future growth prospects are bolstered by robust earnings expectations and a well-established position in the digital advertising market.
A lot of experts think it’s a good idea to buy now before prices go up even more. Even though what happened in the past doesn’t always mean it will happen again, Meta Platforms is showing signs that it could do well in the future. So, if you’re an investor interested in technology, adding Meta to your investments might be a smart choice.
