4. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 194
P/E Ratio as of April 4: 24.25
Meta Platforms, Inc. (NASDAQ:META)’s Family of Apps segment offers Facebook, Instagram, Messenger, and WhatsApp. These applications enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. It is one of the best cheap social media stocks to invest in.
On March 30, Stephen Ju, an analyst at Credit Suisse, increased the firm’s price target for Meta Platforms, Inc. (NASDAQ:META) from $220 to $251 and maintained an Outperform rating on the shares prior to the release of quarterly results. According to the firm, Meta Platforms, Inc. (NASDAQ:META) has already announced two rounds of cost cuts, and the investment rationale now depends on revenue growth outperformance. Credit Suisse highlighted that Meta has made up for the $10 billion in lost revenue after ATT by using Click-to-Message and believes there is a lot of potential for revenue growth for both Messenger and WhatsApp. In addition, the firm noted that Instagram’s recent announcement of showing ads within search results can bring in a new stream of high-margin revenue, which could potentially reach close to $1 billion over the next few years.
According to Insider Monkey’s fourth quarter database, 194 hedge funds were long Meta Platforms, Inc. (NASDAQ:META), compared to 177 funds in the prior quarter. Boykin Curry’s Eagle Capital Management is the largest stakeholder of the company, with more than 9 million shares worth $1 billion.
Davis New York Venture Fund made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its 2022 annual investor letter:
“As both a “blue chip of tomorrow” and a company languishing under “headline risk,” our investment in Meta Platforms, Inc. (NASDAQ:META) reflects these two investment themes. With more than three billion daily users across its three platforms (Facebook, Instagram and WhatsApp), Meta has more users than almost any company in history. Despite this success, Meta currently languishes under a cloud of skepticism concerning two issues: competition from other services, such as TikTok, and significantly increased spending both on artificial intelligence (AI) and speculative new ventures including virtual reality and augmented reality (often referred to as the metaverse).
Starting with competition, despite the drumbeat of negative headlines, which leads most investors to assume that Facebook’s core businesses are shrinking, Figure 9 shows continued growth in the number of users on their core service, including Facebook (green bars), as well as the company’s entire family of applications.
The gold line in Figure 9 shows Meta’s ad revenue per user up more than 30% since 2019 but down from last year’s peak. While we find this decline concerning, it is hardly surprising given the slowing economy and time needed for Facebook to adjust to changes made by Apple—somewhat disingenuously in the name of privacy—that reduced the efficacy of some of Meta’s advertising while favoring Apple. We highlight this decline as a risk but believe it will prove temporary. We think that Meta’s growing user base as well as the continued growth in the amount of time users are spending on these platforms is a far more important indicator of Meta’s relevance and value…” (Click here to view the full text)
