Meta Platforms Inc (NASDAQ:META)
Mark Zuckerberg’s efforts to persuade the market Meta Platforms is ready to become a lean profit maker have found another supporter. The stock was raised to the Overweight rating from the Equal Weight position by the analysts at Morgan Stanley.
Several investors exhibited skepticism when Mark Zuckerberg outlined his plans to turn Facebook into a Meta Platforms. They had the impression that the business had become bloated and unwieldy as a result of the enormous expenditures associated with running such a large social network. To convince them that Meta Platforms could become a lean profit maker, Zuckerberg had to address three significant issues.
First, it was necessary for him to devise strategies for cutting the costs incurred by the organization. This meant reducing spending on endeavors that did not generate as much revenue, such as the production of virtual reality devices and drones. In addition to this, Zuckerberg centered his attention on streamlining the operations of the company, with a particular emphasis on strengthening its data centers and infrastructure.
Second, Zuckerberg had to demonstrate that Meta Platforms could create revenue beyond advertising. Although while advertising had traditionally been Facebook’s primary source of revenue, it was abundantly evident that the firm needed to broaden its range of revenue sources. In addition to the metaverse itself, Zuckerberg considered the possibility of making money through e-commerce and other forms of digital payment.
It has not escaped anyone’s attention that Zuckerberg is working hard to turn Meta Platforms into a streamlined business that generates profits. In point of fact, the company only just gained a new backer in the form of Cathie Wood, the chief executive officer of Ark Invest. Wood has been a prominent advocate of technological companies that she believes are on the bleeding edge of innovation, and she believes that Meta Platforms meets the criteria for such a company.
Wood has been quite complimentary of Zuckerberg’s strategy to broaden the revenue sources of Meta Platforms as well as his vision for the Metaverse. She believes that the company has the potential to become an important participant in the e-commerce, cryptocurrency, and virtual reality markets of the future.
After announcing last week that it would eliminate another 10,000 employees and as Mark Zuckerberg continues to emphasize that the firm, which owns Facebook, is dedicated to efficiency, Meta (NASDAQ:META) has been receiving a lot of encouraging feedback from industry analysts.
The analysts at Morgan Stanley, led by Brian Nowak, stated in a written report that “We think Meta’s ‘year of efficiency’ is more than just a 365-day change.” “Rather than that, [it is] a structural and cultural shift toward operating more efficiently and with a sharper focus on investor returns,”
According to the analysts, Meta appears to be in a better position to deal with the possibility of a decline in consumer spending than either Alphabet (NASDAQ:GOOGL), which is Google’s parent company, or Amazon.com. He made the observation that the former is decreasing spending more moderately, whilst the latter has greater exposure to the retail industry.
Morgan Stanley boosted its target price on the stock to $250 from $190. During premarket trading, Meta’s share price increased by 2.6% to $203.00. The stock price has increased by 64% so far this year.
Analysts from Edward Jones also increased their rating on Meta stock this week, while a slew of other analysts has lifted their price estimates for the company’s shares in recent weeks.
It isn’t only decreased operational costs that are encouraging confidence. The analysts at Morgan Stanley also noted that Meta looks to be enhancing viewer engagement with its Reels short-video format for Facebook and Instagram. This is accomplished with the assistance of artificial intelligence algorithms that improve the choices that users are shown.