META Platforms Inc (META:NASDAQ) Stock Overview – All You Need to Know About Meta Platforms Inc

About Meta Platforms Inc

History of the company

Meta Platforms, Inc., doing business as Meta, operates as a global social technology company and is more commonly known as the parent company of Facebook, the largest social media network in the world with over 2.9 billion monthly active users as at Jan 2023 ^[1].

The company was originally founded as Facebook in February 2004 by Mark Zuckerberg – together with co-founders Dustin Moskovitz, Chris Hughes and Eduardo Saverin. Facebook proved to be an early hit; by December 2004, the social network had garnered 1 million subscribers ^[2].

New features were added as development continued, including moving from desktop to mobile (2006) and later, a dedicated app for the iPhone (2008). Following a redesign and introduction of the “Like” button, Facebook’s user base had reached 500 million by July 2010 ^[3].

In 2012, the company achieved three of its most significant milestones. One was the acquisition of Instagram in April, and two, the launch of its Initial Public Offering in May. By October 2012, Facebook had over 1 billion active users worldwide ^[4].

The company would continue to cement its dominant position, bolstered by the acquisition WhatsApp and VR-gear maker Oculus in 2014; and impressive growth in active users for Messenger and Instagram (over 1 billion monthly active users by July 2016 and June 2018 respectively), as well as WhatsApp (over 1 billion daily active uses by July 2017. Meanwhile, Facebook itself reached 2 billion monthly active users in June 2017 ^[5].

In October 2021, the company was renamed and rebranded to Meta Platforms in a reflection of its new vision ^[6].

Meta Platforms Inc’s Share Price 2024 ^[7][8]

Here’s a look at how Meta has been performing over the past year:   

 

Chart 1: Meta share price performance for the past year 

Meta’s growth trajectory began in October 2023 with better-than-expected Q3 earnings, driven by significant increases in ad revenue from improved AI-driven ad targeting. 

In February 2024, the stock surged following impressive Q4 and full-year 2023 results, with a 16% revenue increase to $135 billion and a 69% improvement in net income. This led to a 20% rally in Meta’s stock price, adding over $200 billion to its market value—the largest one-day market cap gain in US history. 

However, in April 2024, the stock plummeted by 12% in a week after Meta announced significant investments in artificial intelligence, potentially causing investor concerns. The social media giant bounced back over the next few months with an all-time high of $539.91 on 5 July 2024, potentially attributed to the continued growth in daily active users across Meta’s platforms which indicated strong engagement and potential for increased ad revenue. 

Following the Q2 2024 report, Meta’s stock jumped over 5% as profits soared 73%. The company reported $39.1 billion in sales (beating forecasts of $38.3 billion) and $5.16 earnings per share (surpassing estimates of $4.72). This came after a 3% gain but amidst a broader tech sector decline, with shares down more than 10% over the past three weeks. 

Business segments 

Meta’s main business segments revolve around advertising revenue that is generated from its diverse range of social media platforms. With Facebook at its core, Meta predominantly earns its revenue through digital advertising ^[9]. 

Leveraging its massive user base and widespread social media presence, Meta offers advertisers an opportunity to reach a wide audience. Through self-serve ads and targeted advertising options, Meta provides a range of advertising solutions for businesses, catering to both large enterprises and smaller advertisers looking to promote their products or services to a vast viewership​.

The company also provides photo-sharing via Instagram and instant messaging services via WhatsApp and Messenger. It is also investing heavily in developing virtual-reality products and services through Meta’s Reality Labs which makes the company’s Oculus virtual-reality headsets ^[10].

About the stock META

META trading information

• Primary exchange: NASDAQ
• Ticker: META
• Country: U.S.
• Currency: USD
• Trading hours:
  • Main: 9.30am to 4pm ET, Mon to Fri
  • Pre-market: 4am to 9.30am
  • After-market: 4pm to 8pm 

When was META listed? 

META was first listed on the NASDAQ on 18 May 2012, in what was the largest technology IPO in the United States. Its share price was USD 38, allowing the company to raise a total of USD 16 billion – a record at that time ^[11]. 

At the time of writing, the price for one META stock is USD 211.94, representing a return of 5.57x. The stock’s highest price was seen on 10 Sep 2021, when it closed the day at USD 378.69 ^[12].

Stock splits

META has never undergone a stock split since its launch. The number of Class A common shares outstanding is estimated to be 2.702 billion as at December 2022 ^[13]. 

(Note: Class A common stock refers to shares owned by retail investors and represents one vote per share. Meta’s management team owns Class B shares that carry 10 votes per share, effectively giving them control over the company) ^[14]. 

Dividends ^[15]

In February 2024, Meta Platforms began paying dividends, announcing its first quarterly dividend of $0.50 per share. This translates to an annual dividend of $2.00 per share, providing a dividend yield of approximately 0.43%. 

Latest developments investors should note 

Strong Q2 revenue growth with optimistic Q3 forecast ^[16]

Meta Platforms reported robust Q2 2024 results, with revenue up 22% to $39.1 billion, exceeding expectations. The company forecasts Q3 revenue between $38.5 billion and $41 billion, reflecting strong global ad sales. Despite a 7% cost increase, operating margin improved to 38%, supported by effective AI-driven ad targeting. Daily active users grew by 7% to 3.27 billion.  

Meta continues significant AI investments, with 2024 capital expenditures projected up to $40 billion, underscoring its focus on long-term growth amidst sector-wide AI advancements. 

Facebook daily active users reached 2 billion in Dec 2022 

Despite a challenging 2022, Meta ended the year with positive growth seen in active user numbers ^[17]. 

Notably, the core Facebook platform saw an average of 2 billion daily active users in December 2022, an increase of 4% year-on-year. During the same period, increases in active users were also seen across the company’s Family of Apps. Daily active people reached 2.96 billion, up 5% year-on-year, while monthly active people grew to 3.74 billion, up 4% year-on-year ^[18].

While the uptick in active users is encouraging, the company still struggles with falling ad revenue. Revenue was USD 32.17 billion for the fourth quarter, and USD 116.61 billion for a full year – a decrease of 4% and 1% year-over-year, respectively ^[19]. 

This was due to a drop in average price per ad of 22% year-over-year for the fourth quarter, even as total ad impressions delivered across Meta’s Family of Apps increased by 23% year-on-year. For the full year 2022, ad impressions increased by 18% year-over-year and the average price per ad decreased by 16% year-over-year.

Nevertheless, the company remains in strong financial health. Cash, cash equivalents, and marketable securities were reported at USD 40.74 billion as of December 31, 2022, against long-term debt of USD 9.92 billion ^[20].

Meta fined over USD 400 million for forcing EU users to accept targeted ads 

In January 2023, Meta was fined over USD 400 million by the Irish Data Protection Commission which concluded that the company’s advertising and data handling practices were in breach of EU privacy laws ^[21].

Both Facebook and Instagram were ordered to pay fines of EUR 210 million and EUR 180 million respectively ^[22]. Additionally, Meta must bring its data processing operations into compliance with the European Union’s General Data Protection Regulation within three months. Essentially, this change forces Meta to ask users in the EU if they wanted their data to be used for ads or not, while also allowing them to change their minds at any time.

In response, Meta announced it will change the legal basis of how Facebook and Instagram use personal data for targeted advertising in the European Union, effectively offering a greater degree of choice to users in the region ^[23].

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