Meta Platforms Rises 7% in a Month: Buy, Sell or Hold the Stock?

Core Insights - Meta Platforms (META) shares have increased by 7.2% in the past month and 11% since the second-quarter 2025 results, driven by strong revenue and earnings growth along with positive guidance [1][10] - The company anticipates third-quarter 2025 revenues between $47.5 billion and $50.5 billion, benefiting from favorable foreign exchange [1][10] Revenue and Earnings Estimates - The Zacks Consensus Estimate for third-quarter 2025 revenues is $49.4 billion, indicating a 21.7% growth year-over-year [2] - The consensus estimate for earnings is $6.69 per share, suggesting a 15.3% increase from the previous year [2] Year-to-Date Performance - META shares have appreciated 31.8% year-to-date (YTD), outperforming the broader Zacks Computer & Technology sector and advertising peers like Alphabet, Amazon, and Snap [3] - In comparison, Alphabet and Amazon shares have increased by 3.6% and 1.3% YTD, while Snap shares have dropped by 27.8% [4] Stock Trading Indicators - META shares are trading above the 50-day and 200-day moving averages, indicating a bullish trend [8] AI Integration and User Engagement - The integration of AI into META's platforms is enhancing user engagement and driving ad revenues, with over 3.48 billion daily users providing a substantial data pool [14] - New AI-powered ad tools have resulted in a 5% increase in ad conversions on Instagram and 3% on Facebook [15] Video Engagement and Content Quality - Video engagement has improved significantly, with Instagram video time increasing by over 20% year-over-year and Facebook video time also surging more than 20% [18] - The recommendation system has led to a 5% increase in time spent on Facebook and 6% on Instagram in the second quarter of 2025 [17] Capital Expenditure and Operating Expenses - For 2025, META's capital expenditure is projected to be between $66 billion and $72 billion, reflecting investments in AI initiatives and core business [19] - Operating expenses are expected to be in the range of $114 billion to $118 billion, with an increase in headcount across various sectors [20] Regulatory and Market Challenges - Regulatory concerns in the U.S. and Europe, along with tariffs and premium valuation, present challenges for META [20] - The company anticipates sluggish monetization from platforms like Threads and WhatsApp, with lower average ad prices expected for WhatsApp ads [21]