01. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 194
Meta Platforms, Inc. (NASDAQ:META) is the biggest social media company in the world. Its Facebook and Instagram services are among the largest in the world. Additionally, Facebook also owns the messaging service WhatsApp. The firm was set up in 2004 and is based in Menlo Park, California.
Loop Capital on May 15 upgraded Meta Platforms, Inc. (NASDAQ:META) from Hold to Buy and raised the price target from $220 to $320. The analysts at Loop Capital initially viewed the company’s expense rationalization as a one-time driver but have grown increasingly optimistic about Meta Platforms, Inc. (NASDAQ:META) revenue outlook. They note that three significant headwinds to revenue – Apple’s ad tracking changes, foreign exchange fluctuations, and the transition to Reels – are all in the process of cycling through and are expected to become tailwinds for the company. According to the firm, these factors have been responsible for a headwind of around mid-teens percent to revenue growth. In addition to normalizing comparisons, Meta Platforms, Inc. (NASDAQ:META) is anticipated to benefit from product-driven enhancements through Advantage+ and monetization momentum on Reels. Loop Capital believes that earnings estimates for Meta should be favorable, barring a severe global recession.
Baron Opportunity Fund made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q1 2023 investor letter:
“We continued rebuilding our position of Meta Platforms, Inc. (NASDAQ:META), the world’s largest social network, this quarter. We believe Meta is competitively well positioned to utilize its leadership in mobile advertising and expand further with the generative AI shift, especially given its massive user base, substantial technological scale, and innovative culture. Core engagement has been strong at Meta, especially with the success of Instagram Reels, which is regaining share from TikTok. Across its platforms, Meta has 3.7 billion monthly active users. A U.S. TikTok ban would further materially benefit Meta. In terms of improving monetization, Meta has developed more effective ad targeting in the last few months with its Advantage+ product. Longer term, Meta has invested in generative AI for years and has among the world’s best and largest datasets and distribution. We believe generative AI can materially help Meta improve existing products (e.g., instantly generate personalized creative ads) and expand into new areas (e.g., through WhatsApp and Messenger chats). On the profitability front, Meta’s management is serious about cost discipline (laying off approximately 21,000 workers) and prioritizing a more efficient environment, led in earnest by CEO Mark Zuckerberg. Valuation remains relatively attractive, especially as we expect double-digit earnings per share growth, and additional growth options remain.”
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