Will Meta Platform’s Reels and Threads Help Win Back Investors?

Shares of Meta Platforms (META) have recovered sharply this year to a 1-1/2 year high in late July after plummeting to a nearly 8-year low last November. After posting a record high in July 2021, Meta Platforms plunged into 2022 after CEO Zuckerberg focused on his vision of the unpopular and unprofitable metaverse virtual reality, which helped the company miss revenue estimates and saw a steep decline in its user base.  However, a return of focus to its core businesses has increased advertising revenue and subscriber growth and helped the stock rally by more than +140% this year.

Meta Platform invested heavily in its Reels format, short-form videos similar to those on rival TikTok, to draw more attention to its Facebook and Instagram social networks.  The pivot to Reels has succeeded in increasing consumer usage of its platforms and helped boost advertising revenues.  In a conference call in July, the company projected revenue could grow as much as 20% in the current quarter.  At the same time, Meta has cut thousands of jobs and reduced costs in what CEO Zuckerberg calls its “year of efficiency.”