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Home Stock Analysis After a strong start to FY24, what does the future hold for Meta Platforms (META)?

After a strong start to FY24, what does the future hold for Meta Platforms (META)?

by xyonent
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Meta Platforms Q1 2024 Earnings Infographic Scaled.jpg

Meta Platforms, Inc. (NASDAQ: META) is ushering in a new era in social media, transforming the user experience with technologies such as artificial intelligence and virtual reality. Today, the technology company leads its peers in digital advertising and user engagement. In the most recent quarter, the company saw a one-fifth increase in ad impressions across its social network, Meta, and ad costs increased 6% year over year. App Family.

The Menlo Park-based company’s shares have risen steadily since the start of the year, hitting a new record last week, before falling back and shedding some of the gains.Interestingly, the stock has nearly doubled since mid-2023. In recent years, the company has frequently outperformed the broader market. Meta earlier this year declared its first cash dividend of $0.50 per share as part of its ongoing efforts to improve capital discipline. Despite the recent share price rally, the company’s stock still appears to be fairly priced.

Positive change

Recent trends on the platform indicate that AI-generated content is on the rise and may largely replace traditional feeds in the future, attracting advertisers and increasing user engagement. Capital expenditures are expected to continue to increase beyond this year due to aggressive investments to support AI research and product development. Supported by strong network effects, diversified revenue streams and advanced advertising tools, Meta is likely to maintain its social media dominance for the foreseeable future. Additionally, the company is investing billions of dollars in “Meta,” a futuristic multi-dimensional virtual space. Metaverse, A concept that promises to revolutionize social networking.

Revenues increased 27% year over year to $36.4 billion in the first quarter of 2024. Revenues grew double digits in all regions. Strong sales growth helped first-quarter net income more than double from the same period a year ago, to $12.4 billion, or $4.71 per share. The company ended the quarter with impressive free cash flow of $12.5 billion, and profits beat expectations, marking the fifth consecutive quarter in which they did so.

Expanding our user base

The number of Family Daily active peoplerefers to one or more registered and logged in users. App Family Users who visited at least one site on a given day increased by 7% over a three-month period. Management expects second-quarter total revenue to be in the range of $36.5 billion to $39 billion. The full-year 2024 capital expenditure target has been increased to $35 billion to $40 billion from the previous range of $30 billion to $37 billion, primarily reflecting increased spending on AI research.

From Meta’s Q1 2024 earnings call:

“Investments in developing more advanced recommendation systems continue to drive engagement on our platforms, signaling that people find added value in discovering content from accounts they don’t connect with. As we improve these systems, we’re expanding the level of content recommended to us across our apps, and we see additional opportunities to make recommendations even more relevant and personalized by evolving our models. Video also continues to grow across our platforms, with video now accounting for more than 60% of time on both Facebook and Instagram.”

Meta’s shares rose early Tuesday after falling from an all-time high last week. The stock has been trading above its 52-week average for the past four months.

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