Don’t Fear Meta’s Fivefold Surge, The Best Is Yet to Come


  • Meta Platforms (META) is now more than fivefold above its 2022 lows.
  • Consider a few things before assuming shares have risen too quickly.
  • META stock is poised to reach higher price levels.
META stock - Don’t Fear Meta’s Fivefold Surge, The Best Is Yet to Come

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As of this writing, Meta Platforms (NASDAQ:META) shares are nearing the $500 per share mark. With this, META stock has experienced a more than fivefold surge from its 2022 lows.

It outperforms similar Magnificent 7 stocks during this time: Apple (NASDAQ:AAPL), and Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL), the parent company of Google and YouTube.

Having said this, many may see this level of out-performance as something for concern. On the surface, that makes sense. It’s common for a stock to skyrocket in price, only to correct in a big way as investors go overboard with expectations, and results fail to meet said expectations.

Fortunately, I don’t see such a situation playing out with Meta Platforms. Here’s why.

META Stock: Too Far, Too Fast? Not So Fast!

Few would disagree that Meta Platforms’ big jump in price during 2023 was fully justified.

At the start of last year, META traded at what some would consider to be a price-to-earnings ratio in value stock territory (14 times trailing twelve month earnings).

There were also concerns that CEO Mark Zuckerberg would continue with its big bet on the Metaverse, at the expense of profitability.

Yet as the year played out, wasn’t the case. Zuckerberg made 2023 a “year of efficiency.” The company implemented layoffs, slashed expenses, and walked back ambitious metaverse plans to refocus on the true next tech frontier (generative AI).

These efforts, plus a rebound in digital ad demand, led to META stock rising dramatically in price, both in tandem to earnings growth, and because of a massive re-rating of the stock (to a valuation of 23.7 times forward earnings).

Most agree 2023’s big run made sense, but some are skeptical about META’s nearly 40% surge since the start of 2024. However, to that I say, “too, far, too fast?” Not so fast! At least, based upon the following factors.

What Justifies (and Stands to Sustain) the 2024 Rally

Based on a stock chart, it could look as though investors (whether out of “AI mania,” FOMO, or simply because of trend-following) are blindly buying META stock, giving little regard to valuation or fundamentals. Even so, before jumping to such a conclusion yourself, consider the following.

Yes, at current prices, Meta Platforms currently trades for around 33 times TTM earnings ($14.87 per share). However, based on sell-side forecasts, META’s valuation appears a lot more reasonable. 2024 consensus estimates call for earnings of around $20 per share, representing a 34.5% increase.

During 2025, consensus calls for earnings growth of 15.7%, with the high end of forecasts calling for around a 46.8% increase to Meta Platforms’ bottom line. Sure, forecasts are not certainties, but it’s not as if the analyst community has pulled these numbers at random. These analysts are considering many catalysts.

For instance, the company’s AI technology and virtual reality hardware catalysts, which I discussed in my last META article.

Alongside this, there’s the potential for Meta to tap further into its developed in-house AI platform, to continue enhancing monetization of its social media platforms, as well as to launch new products/services.

The Verdict: Still a Standout, Still a Strong Buy

For Apple and Alphabet, capitalizing on AI is still largely a “work in progress.”

Meta Platforms is already (and is poised to continue) capitalizing on the generative AI trend. In turn, shares could continue trading at a valuation premium to both AAPL and GOOG.

Even if META cannot benefit from further multiple expansion, simply maintaining its current valuation could still mean strong returns for investors, assuming results fall in line with the forecasts above.

Over the next few years, what looks like a lofty price level for the stock today ($500 per share) could look downright cheap in hindsight.

With this in mind, don’t let the recent spike scare you out of an existing META stock position. If you’ve yet to enter a position, don’t let it make you hesitant to make this “Mag 7” standout a buy.

META stock earns an A rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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