Meta Platforms Adds Ads in WhatsApp: Is it the Next Revenue Pillar?

Core Insights - Meta Platforms (META) is enhancing its WhatsApp features by introducing channel subscriptions, promoted channels, and ads in the Status tab, which is utilized by 1.5 billion users globally while ensuring user privacy through end-to-end encryption [1][10] - The company generated 97.8% of its total revenues in Q1 2025, with a focus on improving advertisers' return on ad spending through its AI-driven ad recommendation system, Andromeda, powered by NVIDIA [2] - The introduction of a new Generative Ads Recommendation model has led to a 5% increase in conversion rates, with significant growth in user engagement across platforms [3] Revenue Growth - META's Family of Apps other revenues reached $510 million in Q1 2025, marking a 34% year-over-year growth, driven by WhatsApp Business and Meta Verified subscriptions [4][10] - The company's 2025 revenue is projected to grow by 11.8% year-over-year, reaching $179.67 billion [4] Competitive Landscape - META faces strong competition for advertising dollars from Alphabet (GOOGL) and Amazon (AMZN), with all three companies expected to capture approximately 50% of global ad spending by 2028 [5] Stock Performance and Valuation - META's stock has appreciated by 19.9% year-to-date, underperforming the broader Zacks Computer & Technology sector and the Zacks Internet Software industry [8] - The forward 12-month Price/Sales ratio for META is 8.98X, compared to the industry's 5.57X, indicating a premium valuation [15]