Meta Platforms, Inc. (NASDAQ: META) is a tech giant that runs popular social media apps and develops innovative technologies. But do you know how to invest in Meta stock (META) and profit from its growth?
Meta Platforms, Inc.'s Overview
Meta Platforms, Inc. (NASDAQ: META) got founded in 2004 by Mark Zuckerberg and his Harvard classmates as a social networking site for college students. Since then, it has grown to become the largest social network in the world, with over 3.6 billion monthly active users across its platforms as of April 2023.
The company changed its name from Facebook, Inc. to Meta Platforms, Inc. in October 2021, reflecting its vision to build the metaverse - a virtual environment where people can connect, work, play and create using immersive technologies.
The company is headquartered in Menlo Park, California, with offices around the world. It employs over 68,000 people as of April 2023. Its CEO is Mark Zuckerberg, who also serves as the board of directors chairman.
As of May 2023, Meta Platforms, Inc. has a market capitalization of about $597.81 billion, making it one of the most valuable companies in the world. For the 12 months ended March 31, 2023, the company reported net income of $21.444 billion on revenues of $117.346 billion.
Meta Platforms, Inc. has achieved many milestones since its inception as Facebook in 2004, such as acquiring Instagram and WhatsApp, launching Oculus VR and Messenger, creating Workplace and Portal, initiating Libra (now Diem) and Horizon, and rebranding as Meta in 2021 to pursue its metaverse vision.
The current company structure consists of two segments: Family of Apps and Facebook Reality Labs. The Family of Apps segment includes Facebook, Instagram, WhatsApp and Messenger, which generate most of the company's revenue from advertising. The Facebook Reality Labs segment includes Oculus VR, Portal, and Horizon, focusing on developing virtual and augmented reality technologies and products.
Who Owns Meta
Mark Zuckerberg owns approximately 13% of Meta's outstanding shares, giving him over 50% of the company's voting power.
Other large holders of Meta stock include The Vanguard Group, BlackRock, and Fidelity Investments. But none owns more than 7% individually.
The vast majority (over 80%) of Meta's shares are held by institutional and individual investors through public shareholdings.
Zuckerberg has majority voting control through his ownership of a special class of stock. This allows him to control the company despite having a minority economic interest.
Meta's Business Model and Products/Services
Meta Platforms, Inc. (formerly Facebook, Inc.) is the world's largest social technology company. It operates a family of apps and devices that help people connect, find communities, and grow businesses. It also leads the development of the metaverse, which is a shared virtual space that connects people across physical and digital worlds.
Business Model
Meta's business model relies mainly on advertising, which makes up 97% of its revenue. Meta sells ad space to advertisers on its platforms, such as Facebook, Instagram, Messenger, WhatsApp, and Reels. Meta uses data and AI to target user ads based on their profiles. Meta also helps advertisers measure and optimize their campaigns. The other 3% of Meta's revenue comes from non-advertising products and services, such as payments, Oculus VR, Portal TV, and Workplace. These products and services enhance users' social experiences and businesses' productivity.
Main Products and Services
Meta's principal products and services include Facebook, a social networking platform that lets users share posts, join groups, watch videos, and more; Instagram, a photo and video sharing platform that lets users create stories, reels, IGTV videos, and more; WhatsApp and Messenger, messaging and voice calling platforms that let users send texts, photos, videos, make group calls, and more; Reels, a short-form video platform that lets users create and watch entertaining clips with music and effects; Oculus, a virtual reality platform that offers VR headsets, games, apps, and experiences; Portal, a smart video calling device that offers a large screen, a smart camera, apps, and features; and Workplace, an enterprise software platform that offers tools, features, integrations, and solutions to help businesses communicate and collaborate better.
Meta's Financials, Growth, and Valuation Metrics
Meta is one of the most profitable and fast-growing tech companies in the world. It has a strong financial position, a diversified revenue stream, and a high growth potential. Let's look at Meta's financial statements, key ratios, and metrics to evaluate its performance and value.
Meta Market Cap
Meta Platforms (META) has a market cap of about $763 billion.
Review of Meta's Financial Statements
Meta's revenue has grown significantly over the past five years, from $55.838 billion in 2018 to $116.609 billion in 2022. Its net income margin dropped from 31% in the first quarter of 2022 to 25% in the first quarter of 2023 due to higher restructuring charges. Its cash and cash equivalents were $37.44 billion as of March 31, 2023, a decrease of 32% year-over-year. Its total assets were $165.4 billion as of March 31, 2023, an increase of 13% year-over-year. Its total liabilities were $34.9 billion as of March 31, 2023, a decrease of 2% year-over-year.
Key Financial Ratios and Metrics
Meta's revenue and earnings growth is impressive compared to its most prominent tech peers, such as Amazon (AMZN), Microsoft (MSFT), Apple (AAPL), NVIDIA (NVDA), Tesla (TSLA), Alphabet (GOOG), Snap (SNAP), Netflix (NFLX), and Advanced Micro Devices (AMD). Meta's revenue declined by 1.94% year-over-year, while its earnings per share grew by 8.63% year-over-year. In comparison, the average revenue growth and earnings per share growth of its peers were -2.14% and -3%, respectively.
Meta PE Ratio: Meta's forward price-to-earnings (P/E) ratio is also attractive compared to its peers, reflecting its high growth potential and reasonable valuation. Meta's forward P/E ratio was 22.64 as of May 3, 2023, while the average forward P/E ratio of its peers was 31.5. This means that Meta stock is currently undervalued based on its growth potential.
Meta stock is a great investment opportunity for investors looking for a high-growth and high-profitability tech stock with a reasonable valuation. Meta stock has a strong track record of delivering solid financial results, a competitive edge over its rivals in innovation and vision, and a bright future ahead as it leads the development of the metaverse.
Meta Stock (META) Performance
Meta stock is among the most popular and profitable stocks in the tech sector. It has a strong growth potential, a loyal user base, a diversified revenue stream, and visionary leadership. It is also at the forefront of developing the metaverse, which could be the next big thing in technology.
META Trading Information
Meta Platforms, Inc. (formerly Facebook, Inc.) trades under the ticker symbol META on the Nasdaq stock exchange. The company changed its name and ticker on December 1, 2021, to reflect its focus on building the metaverse.
The stock denominates in US dollars (USD) and trades from 9:30 a.m. to 4:00 p.m. Eastern Time (ET) on weekdays. You can also trade Meta stock in the pre-market (4:00 a.m. to 9:30 a.m. ET) and after-market (4:00 p.m. to 8:00 p.m. ET) sessions.
Meta stock was first listed on May 18, 2012, at an initial public offering (IPO) price of $38 per share. The stock has split twice since then: a 2-for-1 split on July 25, 2013, and a 3-for-1 split on August 27, 2020.
Meta Dividend: Meta does not pay dividends to its shareholders. Instead, it reinvests its earnings into its business and growth initiatives.
Some of the latest developments that investors and traders should note are:
● Meta invested $10 billion in developing the metaverse in 2022, more than its annual research and development budget.
● Meta launched Horizon Worlds, a social virtual reality platform that allows users to create and explore immersive digital environments with their friends.
● Meta reported a double earnings beat for the first quarter of 2023, with revenue of $28.64 billion and earnings per share of $2.20, exceeding analysts' expectations.
● The company is facing increased competition in the virtual reality space from rivals such as Apple, which is reportedly developing its own VR headset, and Reliance Jio, which launched a $16 VR headset in India.
Overview of Meta Stock (META) Performance
Meta stock performed well in the past few years thanks to its strong financial performance, growth potential, competitive advantages, and innovation.
As of May 3, 2023, Meta stock closed at $237.03 per share, up 106% from its closing price of $223.41 per share on May 4, 2022.
Meta stock has also outperformed its peers in the tech sector, such as Amazon (AMZN), Microsoft (MSFT), Apple (AAPL), NVIDIA (NVDA), Tesla (TSLA), Alphabet (GOOG), Snap (SNAP), Netflix (NFLX), and Advanced Micro Devices (AMD).
Meta stock has a market capitalization of $597.81 billion as of May 8, 2023, making it one of the most valuable companies in the world.
Key Drivers of Meta Stock Price
Some of the key drivers that affect Meta stock price are:
● User growth: Meta has over 3.5 billion monthly active users across its platforms, making it the largest social network in the world. User growth drives advertising revenue, which accounts for about 97% of Meta's total revenue.
● Innovation: Meta constantly innovates and launches new products and services to enhance its user experience and engagement. Some of its recent innovations include Reels, Shops, Oculus Quest 2, Portal TV, and Horizon Worlds.
● Metaverse: Meta is leading the development of the metaverse, which is a shared virtual space that connects people across physical and digital worlds. The metaverse could create new opportunities for social interaction, entertainment, education, commerce, and more.
● Regulation: Meta faces regulatory challenges from various governments and agencies worldwide over issues such as data privacy, content moderation, and antitrust.
Meta Stock Forecast
Meta Stock Price Prediction
Meta stock has a bright future as it continues growing its user base, revenue, and earnings. It also has a competitive edge over its rivals regarding innovation and vision. Meta's investment in the metaverse could be a game-changer for the company and the industry. The metaverse could create new sources of revenue and value for Meta and its users.
Is Meta stock a buy? Most analysts rate Meta Platforms stock as a buy, with a projected Meta price target of $268.73.
However, Meta also faces risks such as competition from other tech giants and social media platforms, regulation from various authorities and jurisdictions, and potential backlash from users and society over its practices and policies.
Therefore, Meta stock is not without challenges and uncertainties. Investors and traders should be aware of the opportunities and risks involved in investing in Meta stock and do their research and analysis before making any decisions.
Risks and Opportunities
Potential Risks Facing Meta
Meta faces several risks that could affect its business performance and stock price. Some of these risks are:
● Competitive Risks
Meta competes with other tech giants like Google, Amazon, Microsoft, Apple, and Netflix, as well as emerging platforms like TikTok. These rivals offer similar or alternative products and services that could attract users and advertisers away from Meta's platforms. Meta also faces competition from other companies developing their versions of the metaverse, such as NVIDIA, Microsoft, Roblox, Unity Software, and Adobe. These competitors could challenge Meta's leadership and innovation in virtual and augmented reality.
● Competitive Advantages
Meta's competitive advantages include its network effects, which make its platforms more valuable and attractive to users and advertisers; its innovation and diversification, which enable it to create new products and services and enter new markets; and its leadership in virtual and augmented reality and the metaverse, which give it an edge over its rivals.
● Other Risks
Meta is subject to various regulations and laws that govern its social media platforms, such as data privacy, content moderation, antitrust, and taxation. Meta could face fines, lawsuits, or bans if it fails to comply with these regulations or violates users' rights or interests. Meta also faces economic downturns that could reduce advertising spending by its customers, as well as public perception challenges due to its involvement in controversies such as misinformation, hate speech, and political interference.
Opportunities for Growth and Expansion
Meta also has several opportunities that could boost its business growth and stock performance. Some of these opportunities are:
● Growth Opportunities
Meta has opportunities to increase the monetization of its messaging platforms, WhatsApp and Messenger, which have more than 2 billion users each but generate relatively low revenue per user compared to Facebook and Instagram. Meta could introduce more features and services that enable users to shop, pay, and transact on these platforms, as well as display more ads. Meta also has opportunities to grow its ecommerce and payments business on its platforms, such as Facebook Shops, Instagram Shops, Marketplace, and Novi (formerly Libra). These services could help Meta capture a larger share of the online retail and digital currency markets. Meta also has opportunities to leverage its virtual and augmented reality technology to create immersive user experiences in the metaverse, such as social gaming, entertainment, education, and work.
● Future Outlook and Expansion
Meta has a positive outlook for its future growth and expansion. The company expects its revenue to grow by 20% year-over-year in 2023, driven by strong demand for its advertising products across its platforms. The company also expects to invest heavily in developing its metaverse vision, which could create new sources of revenue and user engagement in the long term. The company also plans to expand its global presence and reach more users in emerging markets such as India, Brazil, Indonesia, and Nigeria.
How to Invest in Meta Stock (META)
If you get interested in investing in Meta stock, you have three main options: holding its shares, trading options, or trading CFDs. Let's compare these options and see which one suits you best.
● Holding Shares
This means buying and owning Meta shares directly from the stock market. You can benefit from dividends and capital appreciation if the stock price increases. However, you also need to pay commissions, fees, and taxes and deal with the hassle of opening a brokerage account and managing your portfolio. It would help if you also had a lot of capital to buy enough shares to make a significant profit.
● Trading Options
This means buying or selling contracts that give you the right to buy or sell Meta shares at a specific price and time. You can use options to speculate on the direction of the stock price or to hedge your risk. However, options are complex and risky instruments that require much knowledge and experience to trade successfully. You also need to pay premiums, commissions, and fees and deal with time decay and volatility.
● Trading CFDs
This means trading contracts for difference (CFDs) on Meta stock with a CFD broker like VSTAR. CFDs are derivatives that allow you to trade on the price movements of Meta stock without owning the underlying asset. You can profit from rising and falling markets by going long or short on Meta CFDs. You can also use leverage to amplify your returns with a small amount of capital.
Why Trade Meta Stock (META) CFD With VSTAR?
Trading Meta stock CFDs with VSTAR allows you to capitalize on the opportunities and challenges that Meta faces in the dynamic and competitive tech industry. You can trade Meta CFDs with confidence and convenience with VSTAR's low trading cost, high liquidity, user-friendly app, and risk management features:
● Low Trading Cost: VSTAR offers zero commissions, super tight spreads, and low overnight fees for Meta CFDs. This means you can keep more of your profits and trade more frequently.
● High Liquidity: VSTAR provides deep liquidity and reliable execution for Meta CFDs. This means you can trade at any time and get the best prices available in the market.
● User-friendly App: VSTAR has an easy-to-use interface that allows you to trade Meta CFDs with just a few taps on your phone. You can also access real-time market data, analysis tools, charts, indicators, and news on the app.
● Risk Management: VSTAR offers negative balance protection, stop loss and take profit orders, and free demo accounts for Meta CFDs. You can limit your losses, lock in your profits, and practice your trading skills without risking real money.
Conclusion
Meta Platforms, Inc. is one of the largest and most influential tech companies in the world. It operates the most prominent social network platforms, such as Facebook, Instagram, WhatsApp, and Messenger. It also makes money from advertising, ecommerce, payments, virtual, and augmented reality. Meta stock has been performing well in the past few years thanks to its strong financial performance, growth potential, competitive advantages, and innovation. However, it also faces some risks, such as regulation, competition, data privacy issues, and public perception challenges.
If you want to invest in Meta stock, you have three main options: holding shares, trading options, or trading CFDs. Among these options, trading CFDs with VSTAR is the best choice for most traders because it offers low trading costs, high liquidity, a user-friendly app, and risk management features.
FAQs
1. Is Meta a good stock to buy?
Opinions are mixed on whether Meta is a good stock to buy currently. Some see value with the stock down over 50% from highs, while others are concerned about metaverse spending and other headwinds.
2. Why is Meta stock down?
Meta stock is down primarily due to reduced advertising revenue as a result of Apple's privacy changes, increased competition from TikTok, and massive spending on metaverse investments.
3. What is the target price for Meta stock?
Analyst 12-month target prices for Meta stock range from about $150 on the low end to $300 on the high end, with a consensus of about $220.
4. What are the Meta stock predictions for 2025?
Meta stock predictions for 2025 vary widely. Some see the stock rebounding to past highs around $380 as metaverse efforts gain traction. Others are more cautious, predicting prices in the $150-$250 range due to uncertainties in the advertising business.
