Does META's Growing Social Commerce Footprint Make the Stock a Buy?

Core Insights - Meta Platforms (META) is enhancing its presence in social commerce, utilizing platforms like Facebook, Instagram, and WhatsApp to promote and sell products or services [1] Social Commerce Landscape - According to Shopify, 89% of social media marketers prefer Facebook for social commerce sales, with one-third of social commerce buyers favoring Facebook for purchases [2] - Instagram is used by approximately 26% of the global population over 13, with shopping tags and shop tabs facilitating product discovery and purchases [2] - META has introduced AI tools for WhatsApp to assist businesses in customer engagement and product discovery [2] Business Initiatives - The Meta Verified initiative offers subscription plans for businesses, providing a verified badge, account support, and impersonation protection, which enhances consumer trust [3] - In Q1 2025, WhatsApp Business Platform and Meta Verified subscriptions contributed to a 34% year-over-year growth in Family of Apps other revenues, reaching $510 million [4] Marketing Tools - META has updated its Ads Manager to allow businesses to manage marketing strategies across WhatsApp, Facebook, and Instagram, optimizing budgets through its AI system [5] - The company plans to introduce Business AI for personalized product recommendations and customer follow-ups via WhatsApp [6] Advertising Revenue Growth - In June, META launched channel subscriptions and ads in WhatsApp's Status tab, which is used by 1.5 billion people daily, expected to attract more advertisers and drive ad revenues [7] - META's focus on AI integration across its platforms is enhancing user engagement and boosting ad revenues, with approximately 3.43 billion daily users [8] Stock Performance - META's shares have appreciated 22.8% year-to-date, outperforming the broader Zacks Computer & Technology sector and advertising peers like Alphabet, Amazon, and Snap [9] - The company is expected to capture about 50% of projected global ad spending by 2028 [10] Financial Estimates - The Zacks Consensus Estimate for Q2 2025 earnings is $5.73 per share, reflecting an 11.05% year-over-year increase [17] - The consensus for 2025 earnings is $25.31 per share, indicating a 6.08% increase over 2024's reported figure [18] Valuation Metrics - META shares are considered overvalued with a forward Price/Sales (P/S) ratio of 9.11X, compared to the broader sector's 6.65X and peers like Alphabet, Amazon, and Snap [19] Investment Outlook - META is investing heavily in AI infrastructure, with capital expenditures expected between $64 billion and $72 billion for 2025 [21] - Operating expenses are projected in the $114-$119 billion range, with an increase in headcount across various sectors [22]