Talk about repeat performance. Shares of Meta Platform have continued their gains this year — right from the start of 2023, which everyone on Wall Street refers to as “the year of efficiency.” A big question mark in 2025 is politics. Year-to-date performance: Up 70% Forward price-to-earnings multiple: 24 vs. five-year average of 21.2 Our rating: Hold-equivalent 2 Our price target: $650 per share ’24 set-up for look back to 2024 Last year was about the medicine taken by Meta executives when they looked to reduce layers of management to work with more agility and cut costs to increase profitability. Had made a commitment. It paid off – not only a 156% increase in operating margin by the end of 2023 (last year’s fourth quarter was reported on February 1), but also an increase in operating margin of more than 20 percent. Meta also declared its first dividend – a sign to investors of CEO Mark Zuckerberg’s confidence in achieving profitable growth while remaining focused on cash generation. The stock didn’t go straight up — it never does — as investors took issue with Meta’s fiscal second-quarter 2024 second-quarter revenue guidance and full-year capital spending increases. Both concerns emerged with first-quarter earnings after the closing bell on April 24. Meta shares fell 10.5% the next day, yet, as we correctly said – hindsight is always 20/20 – as noted in our analysis of that Q1 report, the pullback was a buying opportunity. As the year progressed, and as shares quickly caught up and continued their uptrend, the Street began to realize that the vast amounts of user data Meta had collected over the years could give it a strong foothold in Generative Artificial Intelligence. Puts you in prime position to become a real competitor. Meta leverages AI to provide better relevant content and advertising. New AI creation tools for companies and organizations allow them to create their own ads. ’25 Look Ahead We are confident that management will stick to its mantra of efficiency, but we also expect the team to keep its foot on the AI ​​investment gas pedal and continue to move forward with Reality Labs, the unit that is leading metaverse efforts and virtual Home is reality headset. While losses at Reality Labs are expected to continue in the near future, we think the Street will be forgiving as long as the red ink is kept under control and profitability and cash flow remain the top priority. After all, without upfront investment in big upside, we wouldn’t get products like Meta’s Ray-Ban Connected glasses, which are largely immaterial in terms of top-line contribution but show promise, especially with Zuckerberg’s Orion Augmented. After previewing the reality prototype. As the company brings more tools to its ad marketplace for sellers and finds new ways to engage with users, we’ll expect average revenue per user (ARPU) to increase. To achieve this, we would like to see better monetization of WhatsApp and Messenger, as well as more user growth on the latest addition to the Family of Apps ecosystem, Threads, which is X, formerly Meta’s answer to Twitter. Improved capabilities for the company’s larger language model, Llama, will be another big focus – helping to strengthen the company’s businesses and opening up new revenue opportunities over time for consumers and business customers. When it comes to social media companies, regulation is always a risk, especially for companies with as much reach as Meta. It’s not quite clear where President-elect Donald Trump stands on Big Tech these days. But we know that in the past he has criticized Meta and other tech companies for having a bias against conservative voices. Zuckerberg and other tech CEOs have been aligning with Trump since the election. Meanwhile, the Supreme Court will hear a challenge to the TikTok divestiture law on Jan. 10 — nine days before the deadline for Chinese company ByteDance to sell TikTok or face a U.S. ban and 10 days before Trump’s inauguration. Banning TikTok in the US would be a boon for Meta’s short-form video reels offering. Additionally, while we think management is serious when it comes to maintaining cost discipline and reducing management complexity, investing in AI and other Reality Labs initiatives is a risk. No one on Wall Street wants to see management take their eye off the profitability ball. (Jim Cramer’s Charitable Trust is long meta. See here for a full list of stocks.) As a subscriber to CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after a trade alert is sent before buying or selling stocks in his charitable trust’s portfolio. 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At the Meta Connect developer conference, Mark Zuckerberg, head of Facebook group Meta, showed off a prototype of computer glasses that can display digital objects in transparent lenses.
Andrzej Sokolow | Picture Alliance | getty images
Talk about repeat performance.
meta platform Stocks have continued their gains this year — right as 2023 begins, which everyone on Wall Street has come to refer to as “the Year of Efficiency.”
A big question mark in 2025 is politics.
