Meta Platforms (formerly Facebook) has demonstrated a strong presence in the social media space, with substantial investments in both its core advertising business and emerging technologies like AI and the metaverse. Recent reports by Morningstar suggest the company's fair value estimate of USD 560 per share, with a market capitalization of USD 1.55 trillion as of January 2025. Despite challenges such as high capital expenditures in AI and ongoing competition, Meta's dominance in social media through platforms like Facebook, Instagram, and WhatsApp is unmatched. For investors, Meta's growth prospects appear robust, but potential risks from its investments in the metaverse remain.

Company Overview

Meta Platforms Inc. is an iconic leader in the social media industry, widely recognized for its portfolio of applications such as Facebook, Instagram, WhatsApp, and Messenger. As of early 2025, Meta boasts nearly 4 billion monthly active users across these platforms. This scale gives Meta an unparalleled advantage in both user engagement and advertising revenue, two major drivers of the company's financial success.
The company's business model revolves around monetizing user data and interactions through targeted advertising. Meta has successfully leveraged its vast user base to attract advertisers, resulting in an average ad revenue per user growth of more than $40 globally by 2023, up from around $25 in 2018. This trajectory is bolstered by advancements in ad-targeting algorithms and a robust pricing strategy.

Financial Performance and Outlook

Meta's financial position is strong, with an impressive market capitalization of USD 1.55 trillion and a price-to-earnings (P/E) ratio of 1.09, reflecting its position within the broader tech industry. As of January 2025, the company's stock trades at USD 610.72, which is slightly above its fair value estimate of USD 560.00 per share, according to Morningstar’s analysis. While this valuation suggests a potential for future growth, the stock is priced at a premium, indicating a potential downside risk in the short term.
Meta’s revenue is driven primarily by its advertising business, which has seen consistent growth, particularly in North America and Europe. However, the company is also eyeing emerging markets in Asia, Africa, and the Middle East, where the growing middle class presents significant opportunities for advertising revenue expansion.

Investments in AI and Reality Labs

Meta's investments in AI, particularly through its Reality Labs division, continue to attract significant attention. While these investments have the potential to enhance user engagement and improve ad-targeting technology, the profitability of Meta's ventures in generative AI and the metaverse remains uncertain. The Reality Labs division has yet to turn profitable, with operating losses exceeding USD 16 billion in 2023. Additionally, Meta’s ambitions in the metaverse and virtual/augmented reality are still in their early stages, with no clear monetization strategy in sight.
Despite these challenges, Morningstar remains optimistic about the potential of Meta's core business, particularly its ad-tech and AI initiatives that improve user targeting and engagement. However, the company's heavy reliance on its social media applications for generating revenue makes its financial stability vulnerable to any disruptions in this area.

Technical Analysis

From a technical perspective, Meta's stock has been trading near its 52-week high of USD 610.72, demonstrating strong resistance at this level. The 52-week low was recorded at USD 486.30, indicating a substantial margin for potential price volatility.
Using candlestick patterns on daily charts, we observe a consolidation phase with occasional spikes driven by news of Meta's AI investments and new product launches. If the stock breaks past the resistance level of USD 620, we could expect a bullish continuation toward the USD 650 mark. Conversely, if the price dips below USD 600, support can be expected around USD 550, with a potential rebound if broader market sentiment turns positive.

Meta's price action indicates a moderate upward trend, though investor sentiment remains sensitive to any changes in regulatory actions or competition from emerging platforms like TikTok.

Support and Resistance Levels

Key support for Meta stock is found at USD 550, while the resistance level sits at USD 620. A break above this resistance level could pave the way for further upward momentum. Conversely, if Meta's stock fails to hold the support at USD 550, the next key level to watch is USD 500.
Fibonacci retracement levels also highlight critical points to watch for potential reversals. The first key level is at 38.2% retracement, approximately USD 590, which could provide a short-term support point. If Meta's stock continues to fall, the 50% retracement level near USD 560 becomes crucial.

Investment Strategy and Competitors

Meta’s dominance in the social media space positions it as a long-term growth opportunity, but risks associated with its ambitious investments in the metaverse and generative AI require caution. The company’s valuation suggests it might be slightly overbought at current levels, but its strong advertising business provides a solid foundation for future growth. As always, investors should carefully consider the long-term potential of Meta’s core business against the uncertainty of its newer ventures.
Investors should also consider the competitive landscape. Major competitors like Alphabet Inc. (Google) and Snap Inc. continue to challenge Meta’s dominance in the digital advertising space. Google’s YouTube and Snap’s innovation in augmented reality provide significant competition, although Meta's scale and user base give it a unique competitive edge.

Conclusion and Recommendation

Based on the latest analysis from Morningstar, Meta is a strong player in the social media and advertising space, with a wide economic moat due to its scale, data advantages, and network effects. While investments in the metaverse and AI present some risks, Meta’s core business remains robust. For investors considering Meta, we recommend holding the stock, with a target price of USD 560.00, as indicated by Morningstar’s fair value estimate.