Metaplatform stock rose nearly 200% last year — is it too late to buy for 2024?

After the epic rally and almost 200% rise in 2023, you might not believe it. meta platform (meta 1.95%) By 2022, it was largely abandoned by Wall Street. As 2024 begins, the stock price of the parent company of Facebook, Instagram, WhatsApp, and Quest virtual reality (VR) headsets has nearly returned to its all-time highs reached in 2024. Pandemic.

Contrary to popular belief, Meta is much more than a social media business. Nor is the company (despite what a name change a few years ago might have implied) betting its future solely on the Metaverse. Meta has an extensive global data center network at its core, enabling millions of businesses, especially small and medium-sized businesses, to reach their audiences. Don’t ignore the possibility that the meta will see him do even better in 2024.

Digital advertising activity could increase further in 2024

The meta comes from CEO Mark Zuckerberg’s “Year of Efficiency,” in which the company vowed to rein in expenses after a pandemic-era spending spike. More on this later. Because one of the keys to Meta stock’s continued success in his 2024 is a resurgence in digital ad spending.

Strong sales growth is expected to be the center of attention when the company releases its 2023 Q4 results on February 1st. Management is forecasting revenue of $36.5 billion to $40 billion, representing a 24% increase compared to the fourth quarter of 2022. Meta remains underperforming in 2022 due to a drop in user activity during the peak of the pandemic and resulting digital spending on apps.Also the influence of apple‘s privacy changes will reduce Meta’s ability to monetize ads on the same tech giant’s devices.

Additionally, other companies involved in the digital advertising ecosystem include: adobe and sales force, both of which are useful for marketing analysis and ad delivery, said that Black Friday, Cyber ​​Monday, and holiday shopping in general reached new records in the last few weeks of 2023. Two large software companies reported percentages in the mid-to-high single digits. Increase in online shopper spending compared to 2022.

With an incredible reach of over 3.1 billion daily active users (as of Q3 2023), Meta powers brand marketing for businesses around the world. Early indicators of strong consumer spending bode well for the social media company, which uses data centers and new artificial intelligence (AI) algorithms to help marketers find audiences and realize sales. could mean.

Part 2 of “The Year of Efficiency”?

Mr. Zuckerberg and his company said they were pleased with the new success in 2023 and that the new operating structure would continue into 2024 and beyond. This means more than just increased revenue. make a profit Increased revenue.

The combination of cost reductions and Meta’s stock repurchase program is already producing impressive results. Earnings per share (EPS) for Q3 2023 was $4.39, a significant 168% increase compared to the same quarter in 2022 and 3.6% compared to Q3 2021 (EPS peak during the pandemic). % increase.

Image source: Meta.

A similar EPS increase is expected in the fourth quarter, likely continuing into the new year. So while Meta has an expensive-looking stock; backwards-On a cosmetic basis (31x trailing 12 months’ EPS and 25x trailing 12 months’ free cash flow), the stock may actually be worth something. forward-Based on appearance (20 times Wall Street analysts’ initial 2024 EPS estimates and 21 times 2024 free cash flow estimates).

It appears it’s never too late to invest in meta stocks for the long term. Businesses are back on track for profitable growth, and data centers and AI are driving healthy returns for marketing customers. Meta could be a standout winner in 2024 as well.