What Drove Meta Stock's 2x Rise?

Core Insights - Meta Platforms has experienced significant stock performance, with a 97% return since the beginning of 2024, outperforming the NASDAQ index which increased by 31% during the same period [3][10] - The company's revenue growth is primarily driven by an increase in ad impressions and the average price per ad, alongside a 7.5% growth in daily active users [5][9] - Meta's net income margin has expanded from 29% in 2023 to 39% currently, contributing to a net profit increase of 72% from $14.87 to $25.58 [6] Revenue Growth Factors - Meta's revenue growth is attributed to a rise in ad impressions and the average price per ad, with a notable increase in daily active users from 3.19 billion to 3.43 billion [5][9] - The company is leveraging AI initiatives to enhance advertising effectiveness and generate more content, which is expected to further boost revenue [5][9] Valuation Metrics - Meta's Price-to-Sales (P/S) ratio has increased by 54%, from 6.9x in 2023 to 10.6x currently, reflecting investor optimism [8][9] - Revenue growth has been significant, with an increase from $135 billion to $170 billion, alongside a slight decrease in total shares outstanding [8] AI Investment Impact - Meta's proactive investment in AI is a key driver of its advertising revenue growth, with the integration of generative AI across its platforms [9][13] - The company has invested $77 billion in capital expenditures since 2023 and plans to allocate an additional $64 to $72 billion for AI infrastructure this year [13] Stock Performance Context - Meta's stock performance has been volatile, with returns of 23% in 2021, -64% in 2022, 194% in 2023, and 66% in 2024, indicating periods of underperformance compared to the S&P 500 [10][12] - Current valuation suggests that Meta's stock is fully valued at approximately $702 per share, trading at a higher P/S ratio than its four-year average [12][13]