In 2021, the company reported earnings of $13.77 per share, versus $8.59 per share reported for the full-year 2022. This alone could get Meta Platforms back to its high-water mark of profitability. Why? For starters, economic conditions, which have negatively affected digital advertising demand since last year, could normalize over the next few quarters. Even so, this positive shift in the underlying story with the company may be poised to continue playing out. Meta Platforms has made major progress turning itself into a lean, mean, profit-making machine. What could lead to these additional gains? Let’s dive in and find out.
Shares could add to recent gains in a big way, although chances are these additional gains would arrive much more gradually. InvestorPlace - Stock Market News, Stock Advice & Trading Tips
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. These include the implementation of widescale layoffs, as well as the company’s scaling back of its metaverse plans. Since last November, when META stock briefly traded for as low as $88.09 per share, this social media play has appreciated in value by over 176%.Īs I have noted previously, this comeback for shares in the Facebook and Instagram parent has been driven by success with cost-saving measures. Eventually, Reelz’s profitability could become a meaningful, positive catalyst for META stock.Since the start of the year, Meta Platforms (NASDAQ: META) stock has nearly doubled in price. The CEO believes that Reelz could contribute positively to the company’s profits in the short term. As a result, ” Reelz monetization efficiency is up over 30% on Instagram and over 40% on Facebook quarter-over-quarter,” Zuckerberg reported. On the AI front, which I explored in my previous column, Meta stated that “it would begin testing artificial intelligence-powered ad tools that can create content like image backgrounds and variations of written text.” That initiative could make the company’s ads more attractive to marketers, meaningfully increasing the number of ads that the company can sell and allowing it to raise the prices of its ads.įurther, Meta is using AI to provide better short- video recommendations to its users. Messaging has likely already started to positively move the needle for Meta and META stock, and that trend could continue and intensify going forward. On the company’s fourth-quarter earnings call, Meta CEO Mark Zuckerberg reported that Meta’s “click to message ads reached a $10 billion revenue run rate.” On its Q1 earnings call, the CEO stated that “the number of businesses using our other business messaging service paid messaging on WhatsApp has grown by 40% quarter-over-quarter.” Increased monetization of Meta’s messaging offerings could positively move the needle for the company’s shares in the not-too-distant future. Meta’s Potential Messaging and AI Catalysts In other words, the shares aren’t a buy at this point, but if the company shows that it’s effectively exploiting its potential, positive catalysts while its threats are not pulling down its financial results, the shares could be worth buying down the road. However, I still believe that META stock remains a “show-me” story at its current valuation. Further, Meta is reportedly continuing to make progress when it comes to combating the negative impact of Apple’s (NASDAQ: AAPL) privacy changes on its business. While performing research for this article, I identified two more potential, positive catalysts (the monetization of messaging and new virtual reality products) and one more threat (an order against the company by the FTC) for Meta.Īdditionally, I have learned that the company is advancing when it comes to utilizing artificial intelligence to enhance the quality of its ads and monetize them. Meta Platforms (NASDAQ: META) stock has multiple, positive, potential catalysts but is facing a few important threats, as I pointed out in a column published on May 14.
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