Meta Platforms, formerly known as Facebook, could be on track to reach a market cap of $1 trillion by 2024. Despite a tumultuous year in 2022, which saw the company’s stock price plummet, Meta made significant operational changes in 2023 that have positioned it for future success.
Following a period of aggressive hiring and new product development, Meta’s expenses rose while its core advertising revenue faltered. However, the company responded by cutting costs through layoffs and refocusing on advertising. This strategy paid off, with Meta experiencing impressive top-line growth and soaring cash flow throughout 2023.
Looking ahead to 2024, Meta is well-positioned to capitalize on various catalysts. Both Facebook and Instagram, which are owned by Meta, rank among the top 10 most visited websites globally, giving the company significant influence over the advertising industry. With a new election cycle approaching, marketing company AdImpact projects that over $10 billion will be spent on political ad campaigns this year, with a significant portion allocated to digital platforms like Meta. This surge in political ad spending could further boost Meta’s revenue and operating margins.
While a near-200% gain like the one witnessed in 2023 may not be repeated this year, Meta does not require such drastic growth to reach a $1 trillion market cap. The company’s commitment to cutting costs and leveraging its dominance in advertising, coupled with its exploration of artificial intelligence (AI) applications, make it an attractive investment. Despite its foray into AI, many still view Meta primarily as an advertising business, which presents an opportunity for investors.
With Meta’s current price-to-earnings ratio below its long-term average, the stock appears undervalued. This, combined with the expected growth in advertising spending and the progress made in AI, suggests that Meta is poised to reach a $1 trillion market cap in 2024.
In conclusion, Meta Platforms is set to achieve significant milestones in the coming years, driven by a combination of increased advertising spending and advancements in AI. With a solid financial foundation and an evolving business strategy, Meta is well-positioned for success in the market.
