Shares of Facebook parent company Meta Platforms is fighting to reignite its rally from last month, which was helped by a strong second-quarter earnings report. While its rally has slowed in recent weeks, Meta stock has gained nearly 45% this year, following a 194% gain in 2023 that helped the social media giant recover from a deep slump in 2022.
Meta rejoined the ranks of trillion-dollar market cap tech companies at the start of the year. Its shares are still highly rated among Wall Street analysts. But there are challenges ahead for the tech giant to build on its growth.
Earlier this summer, some investors began rotating away from the group of Magnificent Seven tech stocks, which includes Meta. Meanwhile, Meta Chief Executive Mark Zuckerberg is pledging to spend tens of billions of dollars on infrastructure to power the company's AI ambitions, as well as its metaverse-focused business. And Meta will be lapping increasingly difficult year-over-year quarterly comparisons for its digital advertising revenue, which still drives nearly all the company's sales.
Still, Meta's second-quarter results impressed and investors seem ready to give Zuckerberg space to spend big on efforts he says are vital to the company's future.
So, is Meta stock a buy? Here's what to know about recent news and action involving Meta stock:
Meta Stock In Consolidation Pattern
Meta stock gained a fraction Wednesday to close at 537.95. Shares have nearly retaken a consolidation pattern buy point of 542.81 after a breaking out on Aug. 22, according to MarketSurge. Following its late August breakout, Meta stock slumped from that high for several days before bouncing up from its 50-day moving average line.
Meta stock has gained for three straight trading sessions, bouncing up from its 21-day line. Meta's Relative Strength Rating, meanwhile, is 91 out of a best-possible 99.
The Facebook parent company's stock struggled for much of July, falling to a three-month low of 442.65 on July 25. The slide came as the broader group of Magnificent Seven stocks struggled. The group — which includes Microsoft, Apple, Nvidia, Alphabet, Amazon and Tesla — shed more than $1 trillion in market cap over a five-day span last month. Some investors rotated out of outperforming big tech stocks and into other markets as confidence increased about a rate cut.
August was better, with a 10% gain for Meta. A strong earnings report helped reverse the trend. Meta stock jumped 4.8% on Aug. 1, following a second-quarter report that beat expectations for sales and earnings. Shares were knocked back a bit after that by a weak U.S. jobs report on Aug. 2 that sent markets tumbling. But investors pushed Meta higher for most of August, prior to a more up-and-down September.
Analysts Bullish Ahead Of Connect Conference
Analysts remain bullish on Meta. Of the 68 analysts following the stock, 85% rate Meta a buy, according to FactSet. Those analysts have calculated an average target price for Meta stock of 572.52, according to FactSet, implying roughly 6% upside from Meta's closing price on Sept. 18.
But there are still several debates about Meta stock among analysts. Some investors remain cautious on plans for big AI spending. The company's metaverse efforts are still costing billions each quarter while contributing less than 1% of the company's revenue. And declines this summer showed how Meta stock can take a hit when broader confidence in the economy slips.
Meta will host its Connect developer conference on Sept. 25, offering a potential catalyst for the stock. The social media giant typically uses the conference to reveal its latest metaverse and AI-focused products and updates.
In a client note initiating coverage on Sept. 10, D.A. Davidson analyst Gil Luria called Meta the top pick among mega-cap stocks, which includes Nvidia. Luria initiated coverage with a buy rating and price target of 600, citing Meta's "combination of emerging leadership in the most important future technology platforms and an attractive relative valuation."
Meta Q2 Tops Expectations
Meta stock rallied at the start of the month on the social media giant's strong second-quarter earnings report.
As reported by the company on July 31, revenue in the June-ended quarter advanced 22% year over year to $39.07 billion. That was better than the $38.26 billion in sales that analysts were forecasting, according to FactSet.
Earnings were $5.16 per share, up 73% from a year earlier. Analysts were expecting $4.72 per share, according to FactSet.
Meta also forecast roughly $39.75 billion in revenue for its September quarter, ahead of analyst expectations of $39.1 billion in sales for the company's Q3.
"We had a strong quarter, and Meta AI is on track to be the most-used AI assistant in the world by the end of the year," Zuckerberg said in the company's earnings release. "We've released the first frontier-level open source AI model, we continue to see good traction with our Ray-Ban Meta AI glasses, and we're driving good growth across our apps."
The results underscored a strong market for social media advertising on Facebook and Instagram, which power nearly all of Meta's revenue. Ad impressions and average price per ad for Meta both increased 10% year over year for the quarter, the company said.
Meta Stock: Forecast For Rest Of 2024
For the full year, analysts project that Meta's revenue will rise 19.7% to $161.5 billion in 2024, after climbing 15.7% last year, according to FactSet. Revenue slipped 1.1% in 2022.
About 98% of Meta's revenue is from advertising placed on its "Family of Apps." The category includes Facebook, Instagram, Messenger, Reels, WhatsApp and Threads. The massive empire has more than 3 billion global users.
Research firm eMarketer estimated at the start of the year that Meta will capture 21.9% of all U.S. digital advertising sales in 2024. Only Google has a bigger projected share, with 27.4%. Amazon is third, with 8.5% of the market.
Meta's earnings, meanwhile, are expected to grow this year but at a slower rate compared to Meta's 2023 recovery year. Analysts project the Facebook parent company will post earnings of $21.30 per share in 2024, up 43% from 2023, according to FactSet. In 2023, its earnings increased 73% year over year.
Meta Stock Technical Ratings
The IBD Stock Checkup tool shows Meta stock holds an IBD Composite Rating of 94 from a best-possible 99. The score means Meta stock is currently in the top 6% of stocks in terms of key performance metrics and technical strength.
Also, Meta stock's Relative Strength Rating has been climbing following its Q2 report. Meta stock has a Relative Strength score of 91 out of 99. That score indicates Meta has outperformed 90% of all stocks in IBD's database over the past 12 months.
However, Meta stock holds a weak Accumulation/Distribution Rating of C-. That rating analyzes price and volume changes in institutional ownership for a stock over the past 13 weeks. The current rating indicates slightly more selling than buying by institutions.
Here is a guide to understanding IBD's rating system.
Meta Stock Market Cap
You can check for Meta's current stock price here. Meta's market cap is $1.36 trillion, as of market close Sept. 18. Here is how the stock has grown over time:
| Time Period | Meta Stock % Gain | S&P 500 % Gain |
|---|---|---|
| 2024* | 52.44 | 17.8 |
| Previous 12 Months* | 79.7 | 26.2 |
| 2023 | 194.3 | 24 |
| 2022 | -64 | -19 |
| 2021 | 23 | 29 |
| Since IPO (May 18, 2012)* | 1,255 | 331.9 |
*Prices as of Sept. 18
