Shares of Meta Platforms (NASDAQ: META) have outperformed the broader market significantly over the last year, with impressive gains of 154%. This growth has been driven by strong increases in both revenue and earnings. Following its latest earnings report, it seems that Meta’s remarkable rally is set to continue.
Meta Platforms released its fourth-quarter and full-year 2023 results on Feb. 1. The company’s stock jumped 20% the following day thanks to its better-than-expected numbers and guidance. Additionally, the stock remains affordable, making it a solid consideration for investors who have not yet invested in this tech giant.
Meta Platforms is making waves in the digital ad market
Meta Platforms reported Q4 revenue of $40.1 billion, a 25% increase over the previous year. The company also reduced its costs and expenses by 8% during the quarter, driving its adjusted earnings to $5.33 per share, triple that of the previous year. These numbers surpassed consensus expectations. Meta’s Q4 revenue grew at its fastest pace since mid-2021, outpacing the full-year revenue increase of 16%, while full-year earnings rose by 73% to $14.87 per share due to its focus on controlling costs and improving business efficiency in 2023.
Meta’s revenue for 2023 indicates a significant 21.5% share of the digital ad market, up from 20.5% in 2022. Furthermore, the company’s revenue forecast for the first quarter of 2024 points to a potential increase of 25% over the previous year, while digital ad spending is expected to jump 13.2% in 2024.
Controlling costs and improving efficiency has allowed Meta to gain ground in the digital ad market, and the company’s innovative AI-focused tools are contributing to this success.
Stronger growth could lead to more upside
Analysts expect Meta’s growth to remain strong in the coming years. Revenue estimates for 2024, 2025, and 2026 have received a significant increase. Additionally, analysts project a 32% compound annual growth rate (CAGR) in earnings for the next five years, signaling significant growth potential for the company. Given Meta’s current forward earnings multiple, the stock seems to be a good buy for investors.
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This article was originally published by The Motley Fool
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