META Stock Forecast: Navigating the Metaverse and Beyond

Anastasia Makuyev This META stock forecast article was written by Anastasia Makuyev – Quantitative Analyst Intern at I Know First.

Highlights:

  • META Platforms has diversified into AI and VR.
  • Meta’s financial results are mixed. Yet, it has exceeded revenue expectations. Analysts are optimistic about its future.
  • Meta’s investments in AI and the metaverse show innovation. Its leadership in digital advertising is strong.
(Source: commons.wikimedia.org)

Overview

Meta Platforms, Inc. (NASDAQ: META) has been a focal point of Wall Street discussions throughout 2023. Meta dominates social media with Facebook and Instagram. Recently, it has diversified into AI and VR. This analysis provides an in-depth look at META’s current performance, strategic initiatives, financial health, and market projections.

Current Performance and Market Sentiment

META’s stock has demonstrated a notable resurgence in 2023, nearly doubling in value. Tech stock sentiment improved, aiding META’s resurgence. Cost-cutting and a focus on generative AI were key contributors. The company’s strategic pivot towards these emerging technologies, particularly after its rebranding from Facebook to Meta Platforms in late 2021, reflects its commitment to staying at the forefront of digital innovation​​.

Financial Highlights and Analyst Perspectives

Meta’s Q1 2023 financials beat expectations. Revenue rose to $28.64 billion, a 3% increase year-over-year. However, net income declined by 24% compared to the same period last year, standing at $5.71 billion​​. Despite this mixed performance, analysts are optimistic about Meta’s future. 30 out of 57 analysts covering the company have rated it as a Strong Buy​​, and Loop Capital recently upgraded its rating from Hold to Buy, with a price target of $320​​.

META Stock Forecast as seen from Yahoo! Finance Analysts.
The overwhelming majority of analysts on Yahoo! Finance are taking a buy stance on META.

Meta’s financial future, as per analyst forecasts, suggests continued growth. For the current quarter, earnings are estimated at $4.9 per share. Sales are projected to grow by 21.1% year-over-year. Analysts expect a further increase in earnings per share (EPS) to $17.44 for the year 2024. Meta’s recent earnings surpass EPS estimates. This trend indicates strong financial performance and market resilience.

Strategic Initiatives and Future Outlook

A significant aspect of Meta’s strategy involves generative AI, showcased in its AI Sandbox – a platform offering innovative ad tools to advertisers​​. The company also announced 2023 as its “year of efficiency,” signaling a shift in strategy from rapid growth to streamlining operations and cost management​​ . Furthermore, Meta’s content recommendation features and ad targeting algorithms are being enhanced with AI, specifically to boost the monetization of its short-video format, Reels​​.

Reality Labs and Metaverse Developments

Meta’s Reality Labs unit, tasked with developing VR and AR technologies, reported $339 million in sales but also a substantial operating loss of $3.99 billion​​. Despite these losses, the long-term potential of the metaverse remains a key focus for the company. Meta’s plan to invest in AI, particularly in generative AI, is seen as a critical step in maintaining its competitive edge in the tech industry​​.

META Stock Forecast: The Future of Reels

Meta’s Reels had a skeptical start in 2020. It’s now a major player in short-form video, challenging TikTok. As of 2023, Reels boasts an impressive $10 billion annual revenue run rate, showcasing its rags-to-riches growth trajectory. Meta’s advanced recommendation software, which has significantly boosted user and advertiser engagement, helps to explain this leap.

META Stock Forecast: Instagram has recently extended Reels Length to 90 seconds, contributing to its success.
Instagram has recently extended Reels Length to 90 seconds, contributing to its success. (Source: Plann)

Reels’ success is further amplified by Meta’s ad platform’s ease of use, attracting over three-quarters of the company’s advertisers. Reels’ growing popularity offers new monetization opportunities. This shift mitigates concerns about diverting users from other profitable areas. Reels boosts user engagement on Facebook and Instagram. It positions Meta well in the digital advertising sector. The ease of placing ads on Reels has led to over three-quarters of Meta’s advertisers using this feature. This ease of ad placement is critical for Reels’ monetization success​​.

Mark Zuckerberg focuses on integrating AI in Meta’s strategy. This enhances content recommendations and ad efficiency. The introduction of overlay ads in 2022 marked a significant shift in Meta’s ad presentation strategy. These ads, less intrusive and more integrated into the content, should boost Instagram’s revenues significantly.

Challenges and Competitiveness

While Meta’s advertising business is expected to continue thriving, its position in the broader AI market faces challenges from established players like Alphabet Inc. and Microsoft Corporation​​. Despite these challenges, Meta’s strong foothold in digital advertising and the potential monetization of WhatsApp are expected to yield significant returns​​. According to the Motley Fool, “WhatsApp for Business’s next step is to offer more automated paid messaging services, including appointment reminders and personalized marketing messages, instead of requiring a human to manually send those messages to potential customers. With that, Meta can offer a full-service advertising funnel with ways to attract, connect, and sell to customers, all through WhatsApp.”

Earnings and Stock Projections

Fiscal 2024 EPS estimates for Meta have improved from $9.57 in December 2022 to $14.15, reflecting the positive impact of the company’s cost-cutting measures and renewed market confidence​​. This positive trend in earnings revisions is a strong indicator of the company’s robust stock market performance and potential for continued growth.

META Stock Forecast is written using META's earnings reports as a guide.
META’s Balance Sheets (Source: META)


Meta has demonstrated impressive resilience and innovation in its third quarter of 2023, marking a significant turnaround from previous challenges. Financially, Meta reported a substantial 23% increase in revenue year-over-year, reaching $34.15 billion, reflecting its strong market position and the effectiveness of its strategic initiatives.

The company’s future outlook remains robust. Despite facing regulatory headwinds, Meta is confidently navigating these challenges. With an expectation of Q4 2023 revenues between $36.5-40 billion and a reduced expense forecast for the year, the company is on a clear path to continued profitability. This financial prudence, coupled with strategic investments in AI and data centers, underscores Meta’s commitment to long-term growth and innovation​​​​.

In the larger market context, Meta’s pivot towards more profitable ventures such as AI and social media has paid off. The company’s stock has seen a remarkable surge, driven by its strong core business and expanding user base. While legal challenges in Europe present some uncertainties, Meta’s overall market position remains strong, with expectations of sustained revenue growth and market capitalization expansion.

META Stock Forecast: Conclusion

Meta Platforms Inc. (META) presents an appealing investment opportunity in the technology industry, with a strategic focus on artificial intelligence (AI) and virtual reality (VR). The company’s expansion in the digital advertising and social media sectors, consistent financial growth, and competitive standing position it for future success. I propose a buy position on META, setting a price target of $345. This target reflects the company’s potential for continued growth and success in the evolving tech and online media markets.

It is worth paying attention that the stock-picking AI of I Know First has a high signal on the one-year market trend forecasts, supporting my position for the META stock forecast. The light green for the short-term forecasts is mildly bullish, while the darker green is a strong bullish signal for the one-year forecast.

Past Success with I Know First Prediction

I Know First has been bullish on the META Stock Forecast in the past. On August 14, 2023, the I Know First Algorithm gave very bullish META stock predictions, which ranked as one of the top-performing predictions with a return of 11.49% in 3 months. The predictability also showed strong confidence that META stock price was very likely to soar, which was in accordance with the actual stock performance. See the chart below.

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Please note-for trading decisions use the most recent forecast.