Shares of social-media and virtual-reality headset maker Meta Platforms (NASDAQ: META) have lost some appeal in recent years due to the rise of rivals like TikTok. Though TikTok is the biggest threat to Meta’s family of apps, I ultimately think Meta will come out on top in a few years. Undoubtedly, CEO Mark Zuckerberg wants you to look at his firm as a metaverse frontrunner and upbeat long-term (think 10 years) investment. Zuckerberg envisions more than one billion people in the metaverse and, with that, billions in digital goods sales (and, of course, ad revenues).
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Though the metaverse is full of potential, Meta will be losing billions, rather than making billions, for quite some time. At this juncture, it’s hard to tell when Meta’s metaverse efforts will pay off. I think it’s doubtful that the October 11 event will cause investors to look past the social-media business, which is doing what it can to keep up.
Social media is still the primary reason to own shares of Meta Platforms. Facebook still seems like a more fitting name for the company, at least until metaverse initiatives can contribute to a larger slice of the Meta revenue pie. Many investors have looked right past the new facade to the social-media family of apps. It’s under considerable pressure, with Facebook’s userbase growth grinding to a halt.
Through the eyes of Gen Z and Millennials, TikTok is the new place for cool kids to hang out. Still, it would be a mistake to discount the firm’s ability to outduel TikTok and any other competing social-media platform. With an unbeatable roster of some of the top social media platforms (think Instagram, Facebook, and WhatsApp), Meta has an ecosystem that could make for a more profitable business.
I am bullish on Meta Platforms stock, even if skeptics think it should be cut from the FAANG cohort.
Meta Platforms’ Family of Apps is an Advantage
In a prior piece, I noted that Meta is more than able to adapt to Apple’s (NASDAQ: AAPL) privacy updates, with its impressive trio in Whatsapp, Facebook, and Instagram. Though the inability to track certain users across the internet may be an expensive setback, I do view Apple’s update as more of a milder inconvenience to Meta in the grander scheme of things. There’s a considerable amount of data that Meta can collect within its own apps. Further, Meta can further integrate its family of apps to play better with one another and keep users engaged.
Reels is a TikTok-like offering that’s included on Instagram and Facebook. With the inclusion of in-app browsers and numerous other offerings that could give users more reasons not to close their apps, Meta can collect an increasing amount of data on its user base. In due time, I don’t think it’s far-fetched to believe that Meta can power higher and move past the hole that Apple’s update kicked it in.
For now, the short-form video trend will continue to give momentum to TikTok and Reels. In a few years, short-form video could go out of fashion, and it could be an augmented- or virtual-reality type of social-media experience that will be the hottest trend.
Indeed, the social media business is subject to intense swoons based on what’s in fashion at any given time. Though Facebook may become a dinosaur in a few years (if it isn’t already), Meta has shown that it can stay on its toes with an offering of its own as new trends emerge.
At the end of the day, you can’t really patent social or short-form video feeds. It’s the firm with the best network (of content creators and viewers) that will have the widest moat. With a strong family of apps, Meta can efficiently serve many of its users to the new hot thing without requiring them to download a new app. Right now, it’s Reels, but in a few years, a new hot app could be added to its family, and it may very well be an original Meta innovation.
Is META Stock a Buy, Sell, or Hold?
Turning to Wall Street, META stock comes in as a Moderate Buy. Out of 34 analyst ratings, there are 27 Buys, five Holds, and two Sells.
The average Meta Platforms stock forecast is $224.15, implying upside potential of 34.9%. Analyst price targets range from a low of $140.00 per share to a high of $466.00 per share.
Conclusion: Things Can Turn Back in Meta’s Favor
It’s been a while since Meta delivered a game-changing original app. In any case, the firm has shown more than capable of creating its own version of a product (copying, if you will) if it fails to be a frontrunner. As Meta looks beyond short-form content to where the puck is going next, I’d look for the tables to turn back in Meta’s favor.
