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What's Behind The 400% Rise In META Stock?
METAMeta Platforms(META) Forbes·2025-05-16 12:20

Core Insights - Meta Platforms stock has surged nearly 30% in the past month, significantly outperforming the Nasdaq index, which rose by 17% [1] - The stock has shown a remarkable 437% return since early 2023, climbing from approximately 120toaround120 to around 645, compared to the Nasdaq's 83% increase [1] - Meta's revenue has increased by 46%, from 117billionin2022to117 billion in 2022 to 170 billion over the last twelve months, driven by higher ad impressions and average ad prices [3][4] - Daily active users across Meta's platforms have grown by 16%, from 2.95 billion in 2022 to 3.43 billion currently [4] - The company's net income margin has nearly doubled from 19.9% in 2022 to 39.2% currently, reflecting strong financial performance [5] - Meta's net income has increased by 188%, rising from 23billionto23 billion to 67 billion over the past three years [6] - The price-to-earnings (P/E) ratio has increased by 80%, from 14x in 2022 to 25x currently, indicating investor optimism [8][10] - Meta's valuation is estimated at 702pershare,suggestingapotentialupsideofapproximately10702 per share, suggesting a potential upside of approximately 10% from current levels [14] Revenue Growth Factors - Meta's primary revenue source is advertising, which is targeted based on user-provided information [2] - The increase in ad impressions and higher average prices per advertisement are key drivers of revenue growth [3][9] - Strategic investments in artificial intelligence are expected to enhance advertising revenues through better user engagement and targeting [4][9] Financial Performance - Meta's net income margin has improved due to user growth, optimized AI infrastructure, effective ad targeting, and cost reductions [5] - The aggressive share repurchase program has reduced outstanding shares by 4%, contributing to a 198% surge in earnings per share, from 8.59 in 2022 to 25.64now[6][8]MarketContextMetasstockexperiencedasignificantdeclineof7725.64 now [6][8] Market Context - Meta's stock experienced a significant decline of 77% during the 2022 market downturn but has since recovered to its pre-crisis peak by January 2024 [11] - The current trading price of around 645 reflects a notable increase in the P/E ratio compared to its three-year average [12][13]