Meta Platforms Inc.: A Promising Investment Opportunity

by Warren Seah

Meta Platforms Inc., the parent company of Facebook, has experienced an impressive surge of over 150% in its shares this year. Despite this, TD Cowen analyst, John Blackledge, has decided to upgrade the stock and believes there is still room for further share upside. In a note to clients, he outlined four reasons to support his decision.

Consensus Expectations Set to Rise

Blackledge’s conversations with professionals in the advertising industry have led him to believe that consensus expectations for Meta Platforms Inc. are likely to increase. He has observed an acceleration in spending on Meta’s platforms, particularly on Instagram, during the second quarter of this year. This growth is driven by an increase in ad impression and suggests a bright future.

Early Momentum with New Ad Format

Notably, Meta Platforms Inc. is gaining momentum with a new ad format for its short-form Reels content. Blackledge highlights that the company is currently ramping up Reels monetization, which is expected to significantly contribute to its top-line growth in the coming years. Additionally, engagement growth for this format appears to be strong.

A Positive Outlook Beyond the Second Quarter

Based on his findings, Blackledge is optimistic about Meta Platforms Inc.’s performance beyond the second quarter as well. With the potential for consensus expectations to rise and the promising success of Reels monetization, the company seems poised for continued growth.

In summary, Meta Platforms Inc. presents a compelling investment opportunity. With increasing consensus expectations and the impressive performance of its new ad format, investors can expect a favorable return on their investment.

Meta’s Potential for Cost Cuts and Revenue Growth

The Mark Zuckerberg-led company, Meta, has been making headlines for its cost-cutting efforts since the previous year. However, analyst Blackledge believes there are still opportunities for further expense reduction.

Despite the cost cuts implemented this year, Blackledge predicts that Meta will still incur nearly $14 billion in losses related to its Metaverse venture in this fiscal year. He foresees ongoing losses in the future as well. Nevertheless, Blackledge remains optimistic that with a change in management strategy, there is potential for additional cost savings.

While Blackledge has not factored in the revenue potential of Meta’s newly launched Threads app, he acknowledges the possibility of it contributing incrementally in the long run. According to his calculations, if Meta monetizes the app in the next year, Threads could generate $5 billion in annual revenue.

Opinion: Meta’s Threads – A Strategic Move Inspired by Steve Jobs

As a result of this positive outlook, shares of Meta experienced a 1.4% increase in premarket trading on Thursday. It is worth noting that this upgrade comes ahead of Meta’s second-quarter earnings report, scheduled to be released after the close of trading on July 26.

Meta’s Threads app has gained significant traction, boasting over 107 million users, as indicated by recent research.

You may also like

Leave a Comment