1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 262
Meta Platforms, Inc. (NASDAQ:META) builds technological products that allow people to share, connect, grow businesses, and find communities. These products help people connect through personal computers, mobile devices, virtual reality (VR), mixed reality (MR) headsets, and wearables. A significant majority of Meta Platforms, Inc.’s (NASDAQ:META) revenue comes from its advertising business. In December, Reuters reported that Instagram is set to account for more than half of META’s advertising revenue in the US in 2025 as the social media platform augments the monetization of its products.
In fiscal Q4 2024, total Family of Apps revenue reached $47.3 billion, up 21% year-over-year. Family of Apps ad revenue for the quarter was $46.8 billion, up 21% on both a reported and constant currency basis. In addition, fiscal Q4 2024 saw the total number of ad impressions served across Meta Platforms, Inc.’s (NASDAQ:META) services increase by 6%, while the average price per ad increased by 14%.
The company is boosting its revenue performance by improving monetization efficiency. To do so, it is optimizing the level of ads within organic engagement and optimizing ad supply on each of its surfaces to deliver them at the time and place they will be most relevant to people.
Furthermore, Meta Platforms, Inc. (NASDAQ:META) is also increasing monetization efficiency by improving marketing performance. The ongoing enhancements to the company’s ads ranking systems are an important driver of this work. In a report released on March 21, Ross Sandler from Barclays maintained a Buy rating on the company, with a price target of $705.00.
Rowan Street Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q4 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META): Investment Initiated: April 2018: Internal Rate of Return (IRR*): 22% *IRR represents the annualized rate of return on an investment, accounting for the timing and magnitude of cash flows over the holding period.
For META, our 22% IRR aligns closely with the company’s compounded growth in earnings per share (EPS) and free cash flow per share during the 6 years holding period.
Looking ahead, Meta is expected to grow its revenues, earnings, and free cash flow per share at mid-teens rates over the next two years. There’s a good possibility that it could exceed these estimates, considering the breadth of growth initiatives currently in place, such as advancements in Al, monetization of Reels, expansion into business messaging, and the ongoing development of the metaverse…” (Click here to read the full text)
Overall, META ranks first among the 12 best advertising stocks to buy now. While we acknowledge the potential of advertising stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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