Meta Platforms (NASDAQ:META), the social media giant with its collective fingers in a range of pies, is getting out of the news business. It’s doing a lot less in terms of distributing news, and that’s leaving a variety of publishers scrambling to find new traffic and revenue streams. The move isn’t sitting well with investors, however, who left Meta shares down fractionally in Monday afternoon’s trading.
Meta’s departure from news—driven mainly by laws in places like the European Union—has led to trouble for publishers, especially those who were depending on Facebook to generate traffic to their various websites. In fact, a report from Chartbeat noted that Facebook represented about 33% of all social traffic in December 2023. That’s great, but it also comes with a dark side: it was 50% in December 2022. Increasingly taking over for Facebook in this field is Google (NASDAQ:GOOG) (NASDAQ:GOOGL), which represented 36% in 2022 and 38% in 2023. It was just 26% back in December 2018.
Maybe It Was the Right Move
While today’s results show a little downside for Meta in light of its news departure, it’s clear that the plan has generally been working out. Meta put more of its resources into developing Reels, as well as virtual reality and artificial intelligence, among other things, and shares nearly tripled in the last year. With a recent 52-week high under its belt and the very real possibility that Meta could get back in the trillion-dollar club by the end of this year, it seems like getting out of the news to focus on other things was helpful, even if it did leave several news outlets high and dry.
What is the Fair Value of Meta Stock?
Turning to Wall Street, analysts have a Strong Buy consensus rating on META stock based on 36 Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 167.13% rally in its share price over the past year, the average META price target of $403.58 per share implies 5.62% upside potential.
