Introduction
Meta was founded as Facebook back in 2004, a social media application. What started as a project by Harvard dropouts turned into one of the biggest social media platforms with over 3 billion monthly active users.
With active involvement in acquisitions and investments, Facebook has transformed itself into a tech giant, Meta, which hosts applications the likes of WhatsApp, Instagram, Facebook, and threads, among others. The share price of Meta has grown over 170% in the past one year, significantly outperforming its Nasdaq composite with a loss of 10%. Does this make Meta’s stock a good investment prospect? Let’s find out.
Highlights and Key Takeaways
- Meta has been successfully translating revenues into net income for the past few years.
- 98% of Meta’s revenues come from selling advertisements to marketers.
- Meta’s social media monopoly gives it a lot of opportunities to monetize users to create new streams of revenue.
Understanding Meta as an Investment
Meta (formerly known as Facebook) is a tech giant that has revolutionized social media and digital advertising. With its vast user base, innovative technologies, and robust monetization strategies, Meta presents an attractive investment opportunity. This article explores the potential benefits and considerations of investing in Meta stock.
Why Invest in Meta?
Meta, Inc. is one of the biggest companies in the world. The company has a market cap of about $946.7 billion, achieved by bringing social media applications like Threads, WhatsApp, and Instagram under their umbrella.
Meta also has an AR project called Reality Labs (RL) where they offer augmented reality-related hardware, software, and content. Since the majority of users lie within Meta’s family of apps, their main stream of revenue comes from selling ads to marketers. Investors are placing their bets on Meta’s stock due to the immense growth potential that lies in their user base. The company currently hosts over 3 billion monthly active users who enjoy lots of free services. If Meta were to monetize this user base, it could create opportunities for exponential growth.
With e-commerce on a constant rise, Meta has seen proportional results, and the forecasts show signs of greens. Meta reported an annual ad revenue of $112.68 billion in 2022, which is expected to grow to $121.9 billion in 2023. In terms of revenue, Meta dominates the market due to its capability to produce results through targeted ad campaigns. With these capabilities, Meta is well positioned to continue growth and capture advertising market share over the years.
Meta has been recording financial solid years in terms of net revenue. The company translated its revenues to a net income of $23.2 billion in 2022, which has continued to grow, resulting in a 12-month net income of $29.73 billion by September 2023. These strong financials, given that Meta has a lot of services that are unmonetized, are also a significant factor in why Meta stock has strong growth potential in the years to come.
Risks Associated With Investing in Meta
Although Meta has a range of products, the income is heavily dependent on one source: ads. A dipping advertisement market will heavily affect Meta’s revenues and, hence, the stock price.
Other factors that may affect Meta’s revenues are government regulation and fierce competition. Meta has already faced issues with regulation in the Cambridge Analytica case. Apart from that, Facebook tried to launch a stablecoin, the aim of which was to create a meta-digital economy in their marketplace, this too was shot down by policymakers.
Meta’s strong bet on Virtual and Augmented reality is also to be tested. A failing augmented reality market will also take a toll on Meta’s financials, which can translate into the share price.
How to Buy MetaStock
Choosing a Brokerage
Buying Meta stock should be approached with caution to stay free from scams and fraud. It is recommended to open a trading account with a reputable broker to be safe. How do you do it?
Do your homework and pinpoint platforms that not only boast user-friendly interfaces but also come with wallet-friendly trading fees. The key factors to consider are:
Features: A solid platform usually comes loaded with perks like demo accounts, retirement options, secure sign-ups, real-time quotes, and analysis tools. Your ideal feature set is pretty personal, so the smart move is to test the waters and sift through customer reviews before committing.
Regulation and Security: Don’t compromise on safety. It’s a must to check if the broker is playing by the rules. Is there proper regulation in place? What about solvency policies? Does insurance cover your investment? These are the questions you need answers to before jumping on board with a stock brokerage.
Fees: Dive into the nitty-gritty of deposit minimums, trading fees, margin rates, and any other associated charges to draw comparisons between platforms. Since cutting costs is critical to boosting profits, a close look at platform fees will tell you if a brokerage is worth your while.
Customer Service: Platforms that lay it all out with transparency, education, and stellar customer service tend to win the hearts of users. Don’t forget to skim through platform reviews to pick up on feedback and comments related to these crucial qualities. It could be the game-changer in your brokerage choice.
Placing a Stock Order
Once you’re rock solid on your decision to buy Meta’s stock, the next logical step is to place an order. This can be done by going into your trading application and typing in Meta’s ticker symbol (META). Type in the number of shares you want or the amount of money you want to invest. To make a purchase, most trading apps will give you the option between two types of orders:
Limit order: This type of order executes the trade once the share price reaches the input level.
Market order: Market orders are executed immediately at the current market price.
Monitoring Your Investment
Understanding Stock Performance
Whether you’re a seasoned investor or a newbie, you need to monitor your investment to make the best out of it. This helps you tweak your portfolio, create opportunities for yourself, and survive bear markets.
Line charts are relatively easy to read, and as a novice investor, you may want to begin from there. The line represents the performance of the company’s share over a while. Ideally, you’d like to keep an eye on the technical indicators to stay ahead of the curve. Moving averages, relative strength index, fear and greed index, and other indicators give a decent idea regarding what the next move of a stock can be. If this seems too jargon, you can also evaluate your portfolio’s performance with benchmark indexes like the S&P 500 and Nasdaq composite.
When To Sell Your Stock
Have your investment goals been met? This is the first thing to check to determine if to sell the stock. Maybe your profit target has been triggered, or the stock’s market run has been exhausted. You just made it! Sell the stock and wait for other opportunities.
Sometimes, you may realize you have an overexposure to a certain stock or market conditions have changed. You may want to sell the stock and buy new ones to give an acceptable risk exposure. This act is called portfolio rebalancing. When this happens, it’s smart to sell some of it. This helps make sure you’re not relying too much on just one company.
Now and then, unexpected things come up, and you might need money quickly. In these emergencies, you might decide to sell some of your shares. But it’s better to always have some emergency savings instead of relying on selling stocks for quick cash.
Sometimes, the value of a company’s stock doesn’t match how well the business is doing. This can happen when the stock is priced too high because people are overly optimistic. In such cases, it’s essential to pay attention and consider selling.
If you come across better investment opportunities that could give you more money than your current ones, it might be a good idea to sell what you have. But remember, this decision should be based on careful thinking and facts, not just on how you feel at the moment.
How To Invest in Meta with Funds
If you’re limited on capital and decide to go all in on one investment, it is usually smart to put this into an index fund that has a percentage of your desired company. Not only does this save you from market volatility, but it also helps you get a taste of investing in your favorite company, or in this case, Meta.
Meta is an integral part of the Nasdaq index, with a weightage of 3.787% in the overall fund. Investing your capital in this fund’s ETF is usually a profitable experience as this is a carefully curated list of companies by financial experts.
Conclusion
Meta’s ability to translate yearly revenues into net income has placed it in a prime position for growth over the years. Most fundamental and technical indicators suggest that this is a great investment asset. However, it is essential to study a company’s financial statements, charts, and macroeconomic conditions before putting all your eggs in one basket.
Generally, a good idea for new investors is to test the waters by working with brokerage demo accounts, after which they can start their investment journey through ETFs and index funds. This can give them a taste of the general market conditions and avoid losing their hard-earned money.
FAQ
How Can I Purchase Metastock?
Meta is one of the biggest companies, with a market cap of over $946.7 billion. The stock is available for purchase on most trading applications and brokerages. Be sure to register with a regulated broker, after which you can use its application to simply type Meta’s ticker (META) and place an order.
Does Meta Pay Dividends?
No, Meta does not pay dividends at the moment.
Are Meta Shares a Good Buy?
According to the current market condition, Meta’s positioning, and indicators, Meta is a good buy.
What Is the Best Stock To Buy Right Now?
Investing.com has rated the following stocks as good buys based on fundamental and technical indicators:
- Semler Scientific (SMLR)
- RCI Hospitality Holdings (RICK)
- Academy Sports Outdoors (ASO)
- Chesapeake Energy Corp (CHK)
- Harmony Biosciences (HRMY)
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