Shares of the social media giant Meta Platforms (NASDAQ:META) have surged since the beginning of 2023, witnessing a remarkable 289% increase during this period. Presently boasting a market capitalization of $1.2 trillion, Meta Platforms stands as one of the world’s largest companies, buoyed by robust engagement metrics and a significant economic moat.

While Meta first achieved a trillion-dollar valuation in 2021, its stock subsequently plummeted by over 70% in the following 12 months due to factors such as tightening profit margins, subdued enterprise ad spending, and sluggish revenue growth.

However, the anticipation of multiple interest rate cuts in 2024, Meta’s strategic focus on cost efficiency, and an upswing in investor sentiment have fueled the recent rally in META stock.

Now firmly reestablished in the trillion-dollar club, let’s explore the potential growth trajectory of the company in the coming years.

Performance of Meta Stock in Q4 2023

In the fourth quarter of 2023, Meta reported a 25% year-over-year increase in sales, amounting to $40.1 billion. Concurrently, operating expenses decreased by 8% to $23.7 billion, resulting in an operating profit of $16.34 billion. Meta’s widening revenue base and declining expenses led to more than doubling its operating margin to 41% over the past year.

Meta operates several leading social media platforms, including Facebook, WhatsApp, and Instagram. As of December 2023, its daily active users (DAUs) totaled 3.19 billion, marking an 8% increase from the previous year. Similarly, monthly active users (MAUs) rose by 6% to 3.98 billion during the same quarter.

The company highlighted that its expansive user base across its Family of Apps facilitated a 21% year-over-year increase in ad impressions in Q4 2023, despite a marginal 2% rise in the average price per ad. Additionally, for the full year 2023, ad impressions surged by 28%, while the average price per ad witnessed a 9% decline compared to the previous year.

Meta pleasantly surprised investors by announcing a quarterly dividend of $0.50 per share, translating to a yield of 0.43%. This announcement triggered a 20% surge in Meta stock, adding a record $196 billion to its market capitalization in a single trading session.

Future Outlook for Meta Stock

For the first quarter of 2024, Meta anticipates sales to range between $34.5 billion and $37 billion. The company also projects total expenses for 2024 to fall between $94 billion and $99 billion, driven by increased infrastructure-related costs, rising capital investments, and higher payroll expenses. Meta forecasts capital expenditures for 2024 to range from $30 billion to $37 billion, representing a 2% increase at the upper end of its guidance.

Despite heavy investments in its Reality Labs business, this segment remains unprofitable. In 2023, Reality Labs reported revenue of $1.89 billion, but incurred losses amounting to $16 billion. Meta’s investments in developing the metaverse are expected to provide a significant first-mover advantage in the coming decade.

Analysts tracking Meta predict a 20% revenue growth to $158 billion in 2024, followed by a 12.5% increase to $178 billion in 2025. Adjusted earnings are forecasted to rise from $14.87 per share in 2023 to $22.90 per share in 2025. By 2028, Wall Street expects Meta’s earnings to reach $48 per share.

Assuming the tech stock is valued at 25 times forward earnings, Meta could potentially deliver a 150% return over the next four years, reaching a market capitalization of $3 trillion by the end of 2027.

Among the 44 analysts covering Meta stock, 39 recommend “strong buy,” one recommends “moderate buy,” three recommend “hold,” and one recommends “strong sell.” The average target price for Meta stock stands at $497.48, representing a 6% increase from the current trading price.

Featured Image: Unsplash @ Julio Lopez

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