Meta Platforms Sees Strong Recovery Amid AI Boom
Shares of Meta Platforms (NASDAQ: META) soared last year as the “Magnificent Seven” stocks reached a trillion-dollar valuation again. This surge mirrored a broader rally among technology companies.
Meta’s Turnaround Story
After a challenging 2022, when falling advertising revenues and heavy investments in its metaverse project weighed down the stock, Meta Platforms is experiencing a significant resurgence in 2024. According to S&P Global Market Intelligence, the stock jumped 65% last month, following a strong earnings report that improved investor confidence.
The chart below illustrates how Meta’s stock began to recover early in the year and maintained an upward trend that coincided with gains in the S&P 500.
Strong Financial Performance
In February, Meta’s stock experienced its best performance of the year after announcing fourth-quarter earnings for 2023. The stock spiked 20% on February 2, following a report revealing a 25% increase in revenue, reaching $40.1 billion. Operating margin more than doubled to 41% due to previous cost reductions and layoffs, with net income tripling to $14 billion, translating to $5.33 per share. This demonstrated the company’s strong profit potential.
In the first three quarters of 2024, Meta continued this positive trend, benefiting from robust demand for advertising and a growing user base. Its popular products include Facebook, Instagram, Messenger, and WhatsApp. For the period, the company noted a 22.5% rise in revenue, alongside a 66% increase in earnings per share.
Looking Ahead: Will Meta Continue to Grow in 2025?
As the new year approaches, Meta appears poised for continued growth, bolstered by a strong digital advertising environment and advancements in AI. Investors are eagerly awaiting the holiday-quarter results, scheduled for release on January 29.
The stock is still considered reasonably priced, trading at a P/E ratio of 29, suggesting potential for further appreciation. While it may not experience the same margins as in 2024, analysts expect another year of growth for investors.
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*Stock Advisor returns as of January 6, 2025
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.
The views and opinions expressed here are those of the author and do not necessarily reflect those of Nasdaq, Inc.