Meta Platforms Rises 23% Year to Date: Should You Buy the Stock?

Core Insights - Meta Platforms' shares have appreciated 22.5% year to date, outperforming the broader Zacks Computer & Technology sector and advertising peers like Amazon and Snap, but lagging behind Alphabet [1][8] - Alphabet's shares increased 32.6% YTD, while Amazon and Snap shares dropped 1.8% and 26.6%, respectively [2] - Meta, Alphabet, and Amazon are projected to absorb approximately 50% of global ad spending by 2028 [1] Performance Analysis - Meta shares are trading above the 200-day moving averages, indicating a bullish trend [6][7] - The Zacks Consensus Estimates indicate an 18% earnings growth for Meta in 2025 as the company expands its AI infrastructure [8][17] User Engagement and Features - Meta is integrating AI across its platforms, including Facebook, WhatsApp, Instagram, Messenger, and Threads, to enhance user engagement and ad revenues [6][11] - New features on Threads allow users to attach up to 10,000 characters to posts and send direct messages, while Instagram has introduced tools like repost, interactive maps, and Friends tab in Reels [12][13] - A centralized Ads Manager for marketing campaigns across WhatsApp, Facebook, and Instagram has been launched, enhancing business and creator presence [14] Security Enhancements - Meta has introduced new anti-scam tools in WhatsApp and passkeys for secure logins on Facebook, improving overall security [15] - The introduction of Teen Accounts on Instagram, Facebook, and Messenger aims to enhance security for younger users [16] Earnings Estimates - The Zacks Consensus Estimate for 2025 earnings is $28.15 per share, suggesting an 18% growth from 2024 [17] - Third-quarter 2025 earnings are estimated at $6.72 per share, indicating an 11.4% growth year-over-year [18] Valuation Metrics - Meta shares are considered overvalued with a forward price/sales ratio of 8.71X, compared to the sector's 6.73X and peers like Amazon at 3.27X and Alphabet at 7.84X [19] Investment Outlook - Meta is heavily investing in AI infrastructure, expected to drive top-line growth and user engagement, justifying its premium valuation [22] - The company holds a Zacks Rank 2 (Buy) and a Growth Score of B, indicating a strong investment opportunity [23]