The valuation of social media behemoth Meta Platforms (NASDAQ: META) is under the spotlight following the firm’s strong Q2 2024 results announcement, which outpaced the majority of analysts’ predictions.
Priced at $474 at the end of trading on July 31, the stock saw an 8% increase within a 24-hour period after the positive results. META shares are currently aiming for the $500 mark and have sustained positive growth throughout 2024, surging more than 37% since the beginning of the year.
Moreover, the equity displayed strong gains in early trading ahead of the August 1 market opening, reaching $517, indicating a 9% uptick.
Meta’s stock performance follows the company’s report of Q2 2024 earnings per share (EPS) beating estimates at $5.16, despite expectations of $5.72, with revenue reaching $39.1 billion, surpassing the projected $38.3 billion. A significant 98% of the revenue came from advertising, primarily on Facebook and Instagram.
Further, the company recorded a user base of 3.27 billion daily active users, surpassing forecasts, translating to over 40% of the global population engaging daily with Meta’s platforms.
On the whole, these results are anticipated to allay concerns about Meta’s substantial investments in artificial intelligence (AI).
In light of this optimistic performance, several recognized financial analysts have updated their Meta price targets, signaling increased optimism about the company’s future prospects.
For example, Jason Helfstein, an analyst at Oppenheimer, raised the price target from $525 to $615 while upholding an ‘outperform’ rating on the stock. This adjustment follows Meta’s robust revenue figures and promising third-quarter guidance. Helfstein emphasized CEO Mark Zuckerberg’s focus on AI investment as a crucial element expected to boost future advertising capabilities and user involvement.
Similarly, banking powerhouse Goldman Sachs (NYSE: GS) adjusted its Meta outlook, elevating the price target to $555 from $522 while maintaining a ‘buy’ recommendation. The firm highlighted Meta’s broad reach across its varied applications as a strength that positions it well to adapt to evolving user trends. The analysts also cited Meta’s potential in short-form video, messaging, online trading, augmented reality, and social networks as major growth drivers.
Elsewhere, Piper Sandler raised its projected price to $575 from $545, maintaining an ‘overweight’ stance, Rosenblatt increased its target to $643 from $562, retaining a ‘buy’ position, and Jefferies adjusted its goal to $600 from $565, continuing to recommend the stock as a ‘buy.’
On the flip side, 28 industry analysts at TipRanks anticipate a favorable rating above $500, with most maintaining a ‘buy’ outlook. The analysts foresee Meta trading around an average of $549 over the next year, with the highest projection at $630 and the lowest at $360.
Notably, this rating surge is expected to heighten investor interest in Meta, especially as the company grapples with various challenges, including intense competition in the social media landscape exerting pressure on its revenue growth.
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