With a market cap of roughly $900 billion, Meta Platforms (NASDAQ:META) could be poised to join the trillion-dollar club in months, not years. Projected earnings growth and growing recognition of Meta’s AI capabilities could drive META stock to $500 or $600 per share. In fact, it could potentially reach a $1.5 trillion market cap within a year. Remarkably, META could align itself with other trillion-dollar giants like Amazon and Alphabet. At least, that’s what the bulls may contend.
Of course, plenty of headwinds could materialize to derail this story. In 2022, all investors could talk about was the company’s spending on its metaverse ambitions. And that hit the company’s bottom line hard. However, with a year of efficiency in the books, investors seem to like what they see with the leaner and meaner social media machine.
Indeed, Meta Platforms remains perennially relevant through Facebook, boasting over 3 billion monthly active users. Transitioning into a tech powerhouse, Meta posted a net income of $23.2 billion in 2022, achieving a profit per employee of $268,000 and ranking 24th globally.
So, let’s dive deep into more reasons that support buying META stock in 2024.
Rise of Threads
Since Threads’ launch, this Twitter/X alternative has steadily introduced user-friendly features, including the praised edit button and voice notes. These enhancements have sparked increased user activity, hinting at Meta’s potential to make Threads more popular in 2024. Further, Instagram’s expansion in Europe, including Germany and Portugal, opens up the app to 448 million more users. So, this suggests a surge in activity across the 100 countries where Threads is already available.
Mosseri’s team aimed to expand Threads’ accessibility by making it available on Fediverse platforms. These launchpads form a network of interconnected social media networks. Specifically, it enables users on one platform, such as Mastodon, to engage with content on another, like Pixelfed, even if they don’t have a direct Threads or Instagram account.
Monetization of Meta Products
Wedbush analysts increased their target price for Meta Platforms to $420 from $350 per share, maintaining an outperform rating. They highlighted Meta as a top idea for the upcoming year. The analysts emphasize its strong position in the digital advertising sector. Also, they anticipate increased adoption and monetization of generative AI services in 2024.
Wedbush expects Meta to benefit from enhanced monetization of new products such as Reels and click-to-message. Reels is expected to contribute modestly to revenue in 2024, while generative AI features such as Meta AI and AI avatars could boost engagement in the coming years.
Confidence is Key
Wall Street predicts Meta Platforms to report earnings of $17.39 per share next year, with an upper estimate of $19.77 per share. Maintaining the current multiple could drive the stock to $425, $450, or even $475 per share. If justified, a forward price-to-earnings ratio of 30x or more could propel META above $500 per share. And, it may potentially reach $600 if all the stars align.
Therefore, any deviation from the market’s forecast could introduce volatility. Positive rate changes may benefit META, while insufficient 2024 rate cuts could have the opposite effect. Thus, there’s plenty of risk to be considered with Meta, or any tech stock for that matter, in 2024.
Although potential challenges exist, META’s reasonable valuation and a recovering digital ad market provide balance. With potential earnings growth and share re-rating, significant gains in the moderate-to-high double-digit range are possible for the stock in 2024.
Staying bullish on META stock is advised, whether holding or considering purchase.
On the date of publication, Chris MacDonald has a LONG position in META The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
