Menlo Park, California-based Meta Platforms, Inc. (META) operates as a social technology company. The company develops products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables. With a market cap of $1.5 trillion, Meta is also involved in advertisements, augmented, and virtual reality.
Shares of this social media giant have outperformed the broader market considerably over the past year. META has gained 77.9% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 35.5%. In 2024, META stock is up 65.2%, surpassing the SPX’s 25.5% rise on a YTD basis.
Zooming in further, META’s outperformance looks less pronounced compared to the Vanguard Communication Services Index Fund ETF (VOX). The exchange-traded fund has gained about 42.1% over the past year. Moreover, META’s gains on a YTD basis outshine the ETF’s 32.1% returns over the same time frame.
META's strong performance is linked to the momentum seen with its Meta AI, Llama adoption, and AI-powered glasses. The launch of new video capabilities, including integration with Instagram Reels, has been well-received. Meta Platforms has over 3.2 billion daily users on its social media apps, driving advertising demand. The company's focus on leveraging AI to enhance user engagement has led to increased time spent on Facebook and Instagram. New features, such as Teen Accounts and Matchmaker on Facebook Dating, have enhanced user safety and experience. The rollout of Meta AI and the forthcoming Llama 4 models are anticipated to further strengthen Meta's position in the market. The availability of Llama in U.S. government agencies through partnerships with various firms is expected to drive adoption.
On Oct. 30, META shares closed down marginally after reporting its Q3 results. Its EPS of $6.03 beat Wall Street expectations of $5.19. The company’s revenue was $40.6 billion, exceeding Wall Street forecasts of $40.2 billion. For Q4, META expects revenue in the range of $45 billion to $48 billion.
For the current fiscal year, ending in December, analysts expect META’s EPS to grow 51.5% to $22.53 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 51 analysts covering META stock, the consensus is a “Strong Buy.” That’s based on 43 “Strong Buy” ratings, two “Moderate Buys,” four “Holds,” and two “Strong Sells.”
This configuration is more bullish than two months ago, with 41 analysts suggesting a “Strong Buy.”
On Nov. 9, Baird analyst Colin Sebastian reaffirmed a “Buy” rating on META and increased the price target to $630, implying a potential upside of 7.7% from current levels.
The mean price target of $650.74 represents a 11.3% premium to META’s current price levels. The Street-high price target of $811 suggests an ambitious upside potential of 38.7%.
On the date of publication, Neha Panjwani 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.
