Strengths and Weaknesses of Meta Platforms Company. Is it worth investing in its stocks?

Meta Platforms, formerly known as Facebook, is the largest social networking platform in the world, attracting billions of users worldwide. The company also owns Instagram and WhatsApp, making it a key player in the social media and messaging sphere.

The strengths of Meta Platforms include:

1. Leadership in social media: Facebook is the largest social networking platform in the world, with a massive user base. This gives the company a significant advantage in attracting advertisers and generating high advertising revenues. Currently, Facebook has around 3 billion users. The company also owns other popular social media platforms and messaging apps, including Instagram and WhatsApp.
2. Ownership of popular platforms: The company owns Instagram and WhatsApp, which are also popular social media platforms. This allows Meta Platforms to expand its audience and diversify its revenues.
3. Use of artificial intelligence: Meta Platforms actively utilizes artificial intelligence to enhance its products and services. This includes content personalization, improved recommendations, and combating unwanted content. The use of artificial intelligence can attract more users and advertisers.
4. Development of the metaverse: Meta Platforms is actively investing in the development of the metaverse, which encompasses virtual reality and augmented reality. This opens up new opportunities for the company in entertainment, communication, and advertising. In the fall of 2023, the company plans to release the new virtual reality headset, Quest 3, for $499.
5. Growth in online advertising spending: According to Morningstar forecasts, the company will continue to benefit from the growth in companies’ spending on online advertising, especially in social media and video advertising. This could lead to an increase in Meta’s advertising revenues.

However, Meta Platforms also has its weaknesses:

1. Dependency on online advertising: A large portion of Meta Platforms’ revenue comes from advertising, which makes the company vulnerable to changes in the online advertising market. Potential changes in user behavior or advertising regulations could negatively impact the company’s earnings.
2. Competition from other social media platforms: Meta Platforms faces strong competition from other social media platforms such as Twitter, Snapchat, and TikTok. This could limit the company’s growth and reduce its share of the advertising market.
3. Regulatory risks: Collecting and using users’ personal data is a key aspect of Meta Platforms’ business. Possible tightening of data protection regulations could affect the company’s ability to collect and use data, which could have a negative impact on its earnings and reputation.

Is it worth buying Meta Platforms stocks?

Analysts from Morningstar believe that Meta stocks will continue to grow due to the increase in companies’ spending on online advertising, especially in social media advertising companies, including video advertising. Analysts believe that the development of the metaverse and the use of artificial intelligence can have a positive impact on the company’s revenues and positions. Through the metaverse and AI, the company can increase advertising revenues and attract more users to its products.

However, there are also negative factors that can affect Meta Platforms’ business. One of the key sources of the company’s revenue is online advertising. Advertising revenues may decrease in the event of stricter regulation in the collection of users’ personal data. Additionally, competition from other social networks can also put pressure on Meta.

According to analysts from Morningstar, the fair value for Meta stocks is $278. This means that the market is currently fairly valuing the company. Analysts also forecast growth for Meta stocks, with target prices from different sources such as Citigroup ($360), UBS ($335), and Roth MKM ($315).

Historical data shows that Meta stocks have shown steady growth since their listing on the NASDAQ exchange in 2012. From 2012 to July 2023, the company’s stocks have grown by approximately 650%. Currently, the price of Meta stocks is $286.98 (as of June 30, 2023).

Overall, the majority of Wall Street analysts express optimistic forecasts regarding Meta Platforms stocks. Around 78% of analysts have a positive outlook on the company’s stocks, 9% hold a neutral position, and only 4% of analysts have pessimistic views.

So, is it worth buying Meta Platforms stocks? Considering the analysts’ forecasts and the historical growth dynamics of the stocks, investing in Meta can be promising. However, it is important to consider the risks associated with dependence on online advertising and competition in the industry. Potential growth and the development of the metaverse can be key factors that will impact the company’s success in the future. Meta Platforms has strong positions in the social media and online advertising market but also faces a range of risks and challenges, including competition and potential regulatory tightening. The company actively invests in the development of new technologies and products, which can help it maintain its positions and ensure future growth.