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meta platform (NASDAQ:Meta) is primarily a social media and AI powerhouse, despite its name change and focus on the Metaverse. While the company aims for Metaverse leadership, long-term investors see value in the company’s cash flow and growth potential. All of these characteristics are included across Meta’s business portfolio.
Despite budding macroeconomic uncertainties, experienced and novice investors can consider investing in this name for continued upside. Here’s why META stock is worth investing in now.
Strong valuation and financials
META stock has outperformed, up more than 40% over the past six months.the S&P500 It rose only 2% in the same time frame. Additionally, it rose 1.5% over the last month. It’s up nearly 160% year-to-date, outpacing the S&P 500’s 10% rise. Mehta reported that 2023 3rd quarter financial results are October 25th. Investors were watching to see how much success the company could continue to have. This is all thanks to effective cost-cutting measures and reduced expense guidance earlier this year.
Meta’s recent improvement in financial strength, 11% revenue growth, and surging cash flow demonstrate the company’s stability in a difficult market. It has 3 billion monthly active users and aims to maintain its position among major technology companies.
The Menlo Park, Calif.-based company is expected to report third-quarter sales of $31.85 billion and earnings of $3.45 per share, a notable increase from a year ago. Full-year profit was expected to increase 47.6% year over year to $12.68 per share, and full-year sales were expected to increase 7.5% year over year to $125.33 billion. These revenue improvements are the result of various cost-cutting measures that increase Meta’s profitability and cost-effectiveness, including reducing non-AI server expenses and shifting spending toward 2024.
META is a profit machine
In the first nine months of 2023, 98% of Meta’s revenue came from advertising. Ad revenue had been declining for three consecutive quarters, but recovered year-over-year in the first quarter and accelerated in the second and third quarters. Apple privacy changescompetition from TikTok, and macroeconomic challenges slowed Meta’s growth last year.
But this year, Meta has adapted its advertising products to counter Apple’s changes, expanded Reels to compete with TikTok, benefited from increased advertising by Chinese e-commerce and gaming companies, and increased average ad prices. This decline was offset by an increase in ad impressions.
Meta’s high-margin ad revenue recovered, helping offset revenue. Loss at Reality Lab This segment has invested heavily in virtual reality and augmented reality devices. The company achieved the highest operating margin in the past two years, demonstrating its ability to balance profits and investment.
Analysts expect full-year sales to rise 7% and profits to rise 47%, and expect sales to rise 13% and profits to rise 24% in 2024 as the macro environment stabilizes. These are impressive growth rates for a stock trading at just 17 times forward earnings.
Investing in the Metaverse may not be a total loss
metaverse, 3D virtual world Thanks to advances in technology and the impact the pandemic has had on remote work and online entertainment, there is renewed attention in the areas of social interaction and digital objects. MetaHis Platforms, led by CEO Mark Zuckerberg, is a central figure in this new trend.
The Metaverse has provided a promising opportunity for meta platforms. We expanded our services beyond social media and introduced innovative products like Horizon Workrooms for remote collaboration, social and gaming experiences. While these ventures have opened up new markets and revenue streams, there’s a reason some long-term investors don’t incorporate long-term negative numbers into their valuation models for this segment.
Meta has diversified its revenue streams with e-commerce, messaging, and virtual reality ventures. Facebook Shops has facilitated direct sales on its platform and enhanced the shopping experience. Messaging apps such as Facebook Messenger and WhatsApp have amassed a huge user base for business interactions. These expansions pave the way for further growth, making this stock perhaps the best choice among megacap tech stocks right now.
Publication date, Chris McDonald I have a LONG position in META. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing Guidelines.