VALUATION HIGHLIGHTS
- Core Advertising constitutes 96% of the Trefis price estimate for Meta Platforms's stock.
WHAT HAS CHANGED?
META Stock Performance In Recent Years
The changes in META stock over the recent years have been far from consistent. Returns for the stock were 23% in 2021, -64% in 2022, 194% in 2023, and 66% in 2024.
In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, 24% in 2023, and 23% in 2024 — indicating that META underperformed the S&P in 2021 and 2022.
Latest Earnings
For Q4 2024, Meta Platforms reported revenues of $48.4 billion, up 21% y-o-y. Meanwhile, the Operating Margin rose to 48% from 41% in the prior-year quarter. This resulted in an earnings figure of $8.02, up from $5.33 in Q4'23. Family daily active people (DAP) were 3.35 billion on average for December 2024 - an increase of 5% y-o-y.
POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE
Below, we highlight key drivers of Meta Platforms' value that present opportunities for upside or downside to the current Trefis price estimate for META.
- Meta Platforms' advertising revenue has increased from $84 billion in 2020 to $161 billion in 2024. Internet users are continuously increasing worldwide and more corporations are opting for online advertisement. As a result, we expect revenues to grow 2x by the end of our forecast period.
BUSINESS SUMMARY
Meta Platforms operates the world's largest social media ecosystem, connecting billions of users across Facebook, Instagram, WhatsApp, Messenger, and Threads. The company generates revenue primarily through digital advertising, leveraging its advanced AI systems to deliver highly targeted ads based on user interests, behaviors, and demographics across its family of apps.
Beyond advertising, Meta's revenue streams include: Reality Labs hardware sales including Meta Quest VR headsets, Meta Quest Store revenue from app sales and in-app purchases, Transaction fees from payments processed through Meta Pay, Subscription services like Meta Verified, Creator monetization tools including tipping, subscriptions, and paid events. Enterprise solutions for businesses and workplaces.
Meta continues to invest heavily in artificial intelligence, positioning itself at the intersection of social connection, commerce, and immersive technologies. The company's business model has evolved from simply facilitating social connections to creating a comprehensive digital ecosystem spanning communication, entertainment, shopping, and virtual experiences.
SOURCES OF VALUE
Advertising On Core Meta Platforms
Advertising remains the primary revenue driver for Meta Platforms, accounting for the vast majority of the company’s overall value. This success is fueled by two key elements: scale and user engagement. Currently, Meta’s suite of apps—including Facebook, Instagram, WhatsApp, and Messenger—reaches over 3 billion monthly active users. Innovative enhancements, such as immersive video experiences, advanced augmented reality features, and integrated virtual reality environments, have significantly boosted user engagement across its platforms. Looking ahead, Meta is poised to further expand its mobile and immersive technology offerings, ensuring that both scale and engagement continue to grow.
In parallel with its extensive user base, Meta has evolved its monetization strategy to meet the changing needs of the digital landscape. By refining ad targeting capabilities, introducing interactive ad formats, and integrating seamless e-commerce functionalities within its platforms, Meta has enhanced the return on investment for advertisers while delivering a cleaner, more engaging user experience. These strategic initiatives not only reinforce Meta’s leadership in digital advertising but also pave the way for sustainable long-term growth.
KEY TRENDS
Other Platforms Have Huge Growth Potential
Meta’s ecosystem—which now features WhatsApp, Instagram, Messenger, Threads, and its latest immersive technology platforms—continues to offer substantial growth opportunities. Strategic investments in these areas, including advancements in augmented reality, virtual reality, and integrated social commerce, are paving the way for multi-billion-dollar revenue streams. Recent innovations and strategic integrations across Meta’s portfolio indicate that the company is effectively unlocking new value. Looking ahead, we expect these dynamic components to drive significant top-line growth for the foreseeable future.
META's Artificial Intelligence (AI) Initiatives To Drive Growth
Meta is accelerating its long-term growth strategy by channeling substantial investments into AI technologies. The company has transitioned from early-stage experiments into developing robust, scalable platforms that integrate virtual, augmented, and mixed-reality experiences into its suite of social applications.
At the core of its AI strategy is the deployment of advanced machine learning algorithms that enhance personalized content recommendations, optimize advertising performance, and power interactive, generative experiences across its ecosystem. Meta is also exploring innovative approaches in immersive computing and digital twin technologies to redefine how users interact with digital spaces.
These forward-thinking initiatives are designed to create a seamless, intelligent digital ecosystem that not only enriches user engagement but also unlocks new revenue opportunities, setting the stage for sustainable growth in the coming years.
