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With a market cap of roughly $900 billion, Meta Platforms (NASDAQ: META) could be on the brink of joining the trillion-dollar club in months, not years. Strong projected earnings growth and growing recognition of Meta’s AI capabilities have led some to speculate that META stock could reach $500 or even $600 per share, potentially pushing its market cap to a staggering $1.5 trillion within a year, aligning itself with other trillion-dollar giants like Amazon and Alphabet.
However, the company has faced challenges, notably excessive spending on its metaverse ambitions in 2022, impacting its bottom line. Yet, a year of efficiency seems to have won investors over, as they embrace the leaner and meaner social media machine.
With Facebook alone boasting over 3 billion monthly active users, Meta Platforms remains a tech powerhouse and posted a net income of $23.2 billion in 2022, achieving a profit per employee of $268,000 and ranking 24th globally.
So, what are some compelling reasons to consider 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. Furthermore, Instagram’s expansion in Europe, including Germany and Portugal, opens up the app to 448 million more users, suggesting 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, enabling cross-platform engagement.
Monetization of Meta Products
Wedbush analysts increased their target price for Meta Platforms to $420 from $350 per share, maintaining an outperform rating and highlighting Meta’s strong position in the digital advertising sector. 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, with Reels modestly contributing 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. A forward price-to-earnings ratio of 30x or more could propel META above $500 per share, reaching even $600 if all the stars align. Yet, any deviation from the market’s forecast could introduce volatility for META stock.
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.