Chicago, IL – April 30, 2025 – Today, Zacks Investment Ideas feature highlights Meta Platforms META, Alphabet GOOGL, Amazon AMZN and Snap SNAP.
Meta Platforms, the world’s largest social media platform operator, will report earnings on Wednesday, April 30th, after the stock market closes. Evolving from its original Facebook website, Meta Platforms has expanded from a once-obscure and one-dimensional company to a wide-ranging social media operator through key strategic acquisitions such as the Instagram photo and video sharing app and the wildly popular and internationally used WhatsApp messaging platform.
Roughly 97% of Meta’s revenues are derived from advertising. Though the company faces tough competition from Alphabet, Amazon and Snap, Meta has grown over the years through synergies within its business and through third parties, innovation, and its massive user base. In addition, Meta is working on breaking into the virtual reality (VR) market with its Oculus division.
Year-to-date, META shares have succumbed to the intense selling in richly valued big tech stocks within the “Magnificent 7” and are down ~8%. However, META shares have pared losses recently, and in context, the losses are relatively small. For example, over the past year, shares are up ~27%, and over the past five years, they have soared ~171%.
The options market implies a rather large move of plus or minus 9.2%.
Zacks Consensus Analyst Estimates suggest that earnings will grow roughly 10.83% for the current quarter and will be flat for 2025.
While META earnings have slowed recently, the company has a long history of beating Wall Street expectations. META has delivered positive surprises in nine consecutive quarters, and over the past four quarters, the social media giant has beaten expectations by an average of 13.77%.
The correction in META shares has made the stock cheaper from a valuation perspective. Shares are trading at ~23x earnings and are hovering near the cheapest levels in two years.
When most investors think of artificial intelligence, they mainly focus on large language models and chatbots such as ChatGPT. That said, many investors underestimate companies like Meta, which leverage AI in unique ways. For instance, META has integrated AI into WhatsApp and Messenger, added visual creating tools for posts on Facebook and Instagram, and is using it to optimize ads. Meta is expected to introduce AI for customer support, video, and multi-modal experiences in time.
Instagram has turned into a cash cow for Meta. Roughly 40% of the content Instagram users see is curated through AI. Through AI optimization, Instagram Reels (short videos) success has led to an increase in time spent on the app by 24%.
Though Meta was caught in the recent tech sell-off, the company has established itself as a leader in the social media realm. Its strong earnings track record and forward-looking approach to AI integration signals a bullish outlook for the company.
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