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Meta Platforms, Inc. (META), headquartered in Menlo Park, California, develops products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. Boasting a market cap of over $1.2 trillion, the company's portfolio of apps includes Facebook, Instagram, WhatsApp, Threads, and Messenger. Formerly known as Facebook, Meta changed its name to reflect its shifting focus toward metaverse and artificial intelligence (AI) applications.
Shares of the mega-cap social media giant have outperformed the broader market over the last year. META has gained 104.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 26.2%. Also, in 2024, Wells Fargo stock rose 34.5%, surpassing SPX's 9.5% rise on a YTD basis.
Narrowing the focus, META's outperformance over the past 52 weeks also looks impressive in comparison to the Global X Social Media ETF's (SOCL) 25.2% returns. Moreover, the stock's YTD double-digit gains outshine the exchange-traded fund's 6.9% returns over the same time frame.
Over the past year, Meta weathered economic turbulence, such as a decline in ad spending – its main revenue source – and scrutiny over privacy and safety. Additionally, it saw researcher exits and waning confidence in AI progress. However, META's solid price action relative to the broader indexes over the past year stems from robust AI investments, diverse products, and revenue growth, further buoyed by the 2024 election year. Meta's Q1 ad revenue rose to $35.6 billion, with a 6% rise in ad prices, showcasing advertisers' trust in Meta's vast user base.
Even though Meta’s Q1 revenue jumped 27% and profit doubled to $12.4 billion, shares of the social media giant tumbled about 10.6% on weak sales outlook and AI spending forecasts.
For the current fiscal year, ending in December, analysts expect META's EPS to grow 35.2% year over year to $20.10 on a diluted basis. The company's earnings surprise history is robust. It beat the consensus estimate in all the last four quarters.
In the last reported quarter, while the company's revenue grew 27%, marginally beating the revenue estimates, its EPS rose a whopping 114% annually, surpassing Wall Street’s estimates by over 9%.
Meta stock is well-loved by analysts and has a consensus "Strong Buy" rating among 46 analysts offering recommendations for the stock. That’s based on 40 “Strong Buy” ratings, one “Moderate Buy,” three “Holds,” and two “Strong Sells.”
This configuration is slightly more bullish than three months ago, with 39 analysts suggesting a "Strong Buy" rating.
After Meta’s Q1 earnings results on April 24, Barclays analyst Ross Sandler lowered his price target by $30 to $520 a share, calling the group's plans an "Investment Cycle With No Revenue." Citigroup's (C) Ronald Josey cut his target by $40 to $550.
Goldman Sachs (GS) analyst Eric Sheridan, however, affirmed a “Buy” rating on Meta, even as he trimmed his price target from $555 to $500, which implies an upside potential of 5%. The analyst noted that faster stock buybacks could soften the blow of a drop in EPS estimates over the coming quarters.
The mean price target of $516.39 is not quite ambitious, but it still represents a premium of 8.4% to META’s current price level. However, the Street-high price target of $600 suggests that the stock could rally as much as 26%.
On the date of publication, Sristi Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
