Meta Platforms (formerly Facebook) has a strong presence in the social media space, with significant investments in both its core advertising business and emerging technologies such as AI and Metaverse. The company has an estimated fair value of US$560 per share and a market capitalization of US$1.55 trillion as of January 2025, according to a recent Morningstar report. Despite challenges such as high capital expenditures and continued competition in the AI space, Meta is no match for Facebook, Instagram, and WhatsApp. Although Meta’s growth prospects look solid for investors, potential risks from investing in Metaverse still remain.
Company Profile
Meta Platforms Inc. is an iconic leader in the social media industry, widely known for its portfolio of applications including Facebook, Instagram, WhatsApp, and Messenger. As of early 2025, Meta boasts nearly 4 billion monthly active users across these platforms. This scale gives Meta an unparalleled advantage in both user engagement and advertising revenue, two key drivers of the company’s financial success.
The company’s business model revolves around monetizing user data and interactions through targeted advertising. Meta has successfully leveraged its vast user base to attract advertisers, resulting in average ad revenue per user increasing by more than $40 globally by 2023, from approximately $25 in 2018. I will. This trajectory is powered by advances in ad targeting algorithms and robust systems. pricing strategy.
Financial performance and outlook
Meta’s financial position is strong, with a market capitalization of US$1.55 trillion and a price-to-earnings ratio of 1.09x, reflecting its position within the broader technology industry. As of January 2025, the company’s stock is trading at $610.72, slightly above its fair value estimate of $560.00 per share, according to Morningstar analysis. While this valuation suggests future growth potential, the stock is commanded at a premium, indicating potential downside risk in the short term.
Meta’s revenue is primarily driven by its advertising business, which has experienced consistent growth, particularly in North America and Europe. But the company is also eyeing emerging markets in Asia, Africa and the Middle East, where the growth of the middle class represents a big opportunity to boost advertising revenue.
Investing in AI and Reality Labs
Meta’s AI investments, particularly through its Reality Labs division, continue to garner significant attention. While these investments have the potential to enhance user engagement and improve ad targeting technology, the profitability of Meta’s business in generative AI and the Metaverse remains uncertain. The Reality Labs division is not yet profitable, with an operating loss of more than $16 billion in 2023. Additionally, Meta’s ambitions in the Metaverse and virtual/augmented reality are still in the early stages, with no clear monetization strategy in sight.
Despite these challenges, Morningstar remains optimistic about the potential of Meta’s core business, particularly its ad tech and AI efforts to improve user targeting and engagement. However, the company relies heavily on social media applications to generate revenue, making its financial stability vulnerable to disruption in this area.
technical analysis
From a technical perspective, Meta stock is trading near its 52-week high of USD 610.72, indicating strong resistance at this level. The 52-week low was recorded at USD 486.30, indicating a large amount of potential price movement.
Using candlestick patterns on the daily chart, we observe consolidation phases that occasionally spike due to news of Meta’s AI investments and new product launches. If the stock breaks through the $620 resistance level, we can expect a bullish continuation towards the $650 level. Conversely, if the price falls below USD 600, we would expect support near USD 550 and a potential rebound if overall market sentiment turns positive.
Although Meta’s price trend is showing a gradual upward trend, investor sentiment remains sensitive to changes in regulatory measures and competition from emerging platforms such as TikTok.
support and resistance levels
The primary support for Meta stock is located at USD 550 and resistance lies at USD 620. A break above this resistance level could pave the way for further upward momentum. Conversely, if Meta stock fails to hold the support at USD 550, the next important level to watch would be USD 500.
Fibonacci retracement levels also highlight important points to watch for potential reversals. The first major level lies at the 38.2% retracement, around USD 590, which could serve as a short-term support point. If Meta stock continues to fall, the 50% retracement level around USD 560 will be important.
Investment strategy and competitors
While Meta’s dominance in the social media space positions it as a long-term growth opportunity, we must be cautious of the risks associated with ambitious investments in the Metaverse and generative AI. The company’s valuation suggests it may be slightly overbought at current levels, but its strong advertising business provides a solid foundation for future growth. As always, investors should carefully consider the long-term potential of Meta’s core business and the uncertainty of new businesses.
Investors should also consider the competitive environment. Major competitors such as Alphabet Inc. (Google) and Snap Inc. continue to challenge Meta’s dominance in the digital advertising space. Google’s innovations in augmented reality with YouTube and Snap provide significant competition, but Meta’s scale and user base give it a unique competitive advantage.
Conclusion and recommendations
Meta is a strong player in the social media and advertising space, with a wide economic moat due to its size, data advantages, and network effects, based on Morningstar’s latest analysis. Metaverse and AI investments come with some risk, but Meta’s core business remains strong. For investors considering Meta, we recommend holding the stock with a target price of $560.00, as shown by Morningstar’s fair value estimate.
