Social media giant Meta Platforms (NASDAQ:META) has bounced back strongly this year driven by its solid execution, streamlining efforts, continued expansion in user base, and the gradual improvement in the digital ad market. META stock has rallied 147% year-to-date and bulls expect the stock to move higher.
Meta’s Recent Performance
Meta Platform’s revenue declined for three straight quarters due to the impact of macro pressures on digital ad spending before bouncing back in the first quarter of 2023. Revenue increased 2.6% in the first quarter, with growth accelerating to 11% in the second quarter of 2023. Additionally, the company’s Q3 2023 revenue outlook range indicates growth of at least 15%.
During the Q2 2023 earnings call, Meta CEO Mark Zuckerberg said that the company is seeing strong engagement trends across its apps. In particular, Monthly Active People or MAP (indicates the number of users who visited at least one of the Family products – Facebook, Instagram, Messenger, and/or WhatsApp in the last 30 days) increased 6% to 3.88 billion as of June 30, 2023.
Meta Bulls See Further Upside
Last month, UBS analyst Lloyd Walmsley reiterated a Buy rating on Meta stock with a price target of $400. He expects the company to roll out generative artificial intelligence (AI) consumer chatbots across WhatsApp, Instagram, and Facebook by the end of September at the Meta Connect event.
The analyst believes that the consumer chatbot rollout would position Meta to win a share in the ~$200 billion search ads market. He projects the revenue opportunity from chatbot search ads at $7.5 billion for the Facebook app alone and over $20 billion across the Family of apps.
Walmsley said that Meta remains one of his favorite names in the internet sector, with many top-line catalysts, including continued engagement growth, Reels monetization, click-to-message ads expansion, Shop Ads rollout, and Twitter rival product Threads.
Like Walmsley, Bank of America analyst Justin Post is also optimistic about Meta and reaffirmed a Buy rating on the stock with a price target of $375. Despite the Q3 2023 outlook indicating revenue acceleration, Post pointed out that Meta stock has slightly underperformed the tech sector recently due to several reasons, including concerns about higher expenses, regulatory uncertainty, growing Metaverse losses, and the loss of Threads momentum.
Nonetheless, Post sees many positive drivers in the second half of this year and 2024, including improving digital ad spend, commerce acceleration in Q4 2023, momentum in Reels and Messaging, and growing artificial intelligence and machine learning capabilities.
Conclusion
Despite regulatory concerns and macro pressures, most Wall Street analysts remain bullish about Meta Platforms. They expect further rise in the stock, backed by many catalysts like Reels monetization and improving digital ad spend.
