Source: PaxForex Premium Analytics Portal, Fundamental Insight
Meta Platforms has proven to be a stellar investment over the years. Despite periods of intense volatility, the company's stock has soared by 1,150% since its initial public offering (IPO) in late 2012, significantly outperforming the broader S&P 500.
Current shareholders, along with those who have never owned this member of the "Magnificent Seven" stocks, might be curious about Meta's potential to help them achieve millionaire status in the future. If reaching a seven-figure net worth is your aim, read on to evaluate whether Meta deserves a spot in your investment portfolio.
A hallmark of a great business is an economic moat - a characteristic or set of characteristics that secure a company's industry position and enable it to deliver robust performance over the long term. Meta exemplifies this concept.
The company operates some of the world's most successful social media platforms, including Facebook, Instagram, WhatsApp, and Messenger. As of March 31, these platforms collectively boasted 3.24 billion daily active users, representing 40% of the global population and marking a 7% increase year over year.
These apps benefit from strong network effects: the more users they attract, the more valuable they become to everyone involved. While anyone with technical skills and funding could theoretically launch a new social media platform, achieving the widespread adoption that Meta has would be an extraordinarily difficult feat.
Meta Platforms has transformed into a financial powerhouse, generating $135 billion in revenue in 2023 - a 16% increase from the previous year - primarily from digital advertising. The company reported $47 billion in operating income last year, achieving an impressive 35% operating margin.
There's no reason to worry about Meta losing its dominant position anytime soon. Management reports strong engagement trends, an encouraging sign especially with the rising popularity of TikTok.
Meta is also heavily investing in artificial intelligence (AI) initiatives. The company is building out servers and data centers to enhance the experience for both users and advertisers, ensuring it maintains its favorable market position for the long term.
If someone had invested $81,000 at Meta's IPO price of over $38, their investment would be worth an astonishing $1 million today - a more than 12-fold gain.
Today, Meta has a market cap of $1.2 trillion, making it the world's seventh-most valuable company. This massive scale means Meta's future returns are likely to be lower than those achieved in the past. As companies grow larger, generating significant growth becomes increasingly challenging.
Despite its size, Meta still appears to be a smart investment candidate. The stock trades at a forward price-to-earnings ratio of 23.9, a reasonable valuation for a business with such competitive advantages.
According to Wall Street consensus analyst estimates, Meta is expected to grow its revenue and earnings per share at compound annual rates of 14.1% and 20.5%, respectively, from 2023 to 2026. While these forecasts should be taken with a grain of salt, they do indicate the company's potential.
Investors willing to put more money into Meta's stock and hold it for the long term are well-positioned to potentially become millionaires from this social media and digital advertising titan.
As long as the price is above 490.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 508.16
- Take Profit 1: 520.00
- Take Profit 2: 530.00
Alternative scenario:
If the level of 490.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 490.00
- Take Profit 1: 480.00
- Take Profit 2: 470.00
