On Monday, Wedbush raised the price target for Meta Platforms Inc. (NASDAQ: NASDAQ:META) to $570 from the previous target of $480, while keeping an Outperform rating on the stock. This adjustment comes as a response to observed growth in advertising on Meta's platforms.
Meta has seen a reported increase in growth from advertisers in the second quarter, which is believed to be a sign of an acceleration in year-over-year growth from US-based advertisers. This marks the fifth consecutive quarter of revenue acceleration from this segment. Notably, 43% of the advertisers reached reported a growth of 10% or more during the second quarter, which is a slight increase from 42% in the first quarter.
The outlook for the third quarter remains positive with approximately 44% of advertisers intending to increase their spending by more than 10% year-over-year. This consistent growth expectation for the third quarter, when compared to the second quarter, is viewed as a promising indicator for Meta's ongoing US growth trajectory.
The commentary from Wedbush highlighted the sustained growth momentum and suggested that the year might progress without a significant deceleration in Meta's US growth, as measured by advertiser location. The firm's analysis is based on the performance and planned spending intentions of advertisers using Meta's properties.
In other recent news, the upcoming earnings season is anticipated to be a key determinant of the broader stock market rally, with investors keenly watching the profit growth of various companies.
Analysts from the Wells Fargo Investment Institute have advised investors to potentially capitalize on the energy, healthcare, industrials, and materials sectors. Meanwhile, the U.S. Supreme Court has vacated previous court decisions related to social media laws in Florida and Texas, instructing lower courts to reevaluate these rulings.
In other recent developments, Meta Platforms faces scrutiny in the European Union over its compliance with the bloc's Digital Markets Act (DMA) regarding its advertising model. The EU Commission alleges that Meta's "pay or consent" model, which requires users to either consent to data tracking or pay for an ad-free experience, violates the DMA. The investigation is set to conclude by next year, and Meta could face a hefty fine if found in breach of regulations.
Lastly, Meta Platforms is considering blocking news content on its platform in Australia to avoid new licensing fees proposed by the Australian government. This follows a 2021 law that enables the Australian government to mandate fees that tech giants must pay to media outlets for the use of their content. The final decision by Meta is pending and could set a precedent for how technology companies handle news content and related fees globally.
InvestingPro Insights
As Meta Platforms Inc. (NASDAQ: META) continues to exhibit robust growth in advertising revenue, a closer look at some key financial metrics from InvestingPro can provide a deeper understanding of the company's financial health and market position. With a formidable market cap of $1.35 trillion and an impressive gross profit margin of 81.5% in the last twelve months as of Q1 2024, Meta's financials reflect the strength of its business model. Additionally, the revenue growth of 21.62% during the same period underscores the company's ability to expand its revenue streams effectively.
An InvestingPro Tip that stands out for Meta is the company's ability to hold more cash than debt on its balance sheet, which may offer a cushion against market volatility and enable strategic investments. Moreover, Meta's liquid assets exceed its short-term obligations, providing further evidence of the company's strong liquidity position. These insights, along with the fact that analysts predict the company will be profitable this year, paint a positive picture for potential investors.
For those seeking more in-depth analysis, there are an additional 15 InvestingPro Tips available, which could be particularly useful when evaluating Meta's investment potential. Interested readers can explore these tips and more at: https://www.investing.com/pro/META. To enhance the value of your InvestingPro experience, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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