Meta Platforms Inc., formerly known as Facebook, is making history with its Meta’s stock performance. The company’s shares are skyrocketing to new highs, adding a staggering $200 billion market value in a single day. This is the most significant one-day market-cap gain ever recorded, surpassing Amazon’s feat in 2022. What’s driving this incredible rally? How is Meta leading the way in the artificial intelligence era? And what does this mean for the future of social media? Find out in this article where we analyze Meta’s latest results, outlook, and vision.
The ratings game behind Meta’s stock rally
Meta Platforms Inc. is having a phenomenal day on the stock market, as its shares are soaring 20% higher in Friday’s trading. This is an impressive feat for such a large company and could set several new benchmarks.
How Meta’s stock breaks records with its surge
For one, Meta shares are poised to break a new record. The stock was trading just below $475 recently. Its previous record close was $401.02, achieved earlier this week.
But what’s even more remarkable is Meta’s gain in market capitalization. The company will add over $200 billion to its worth daily. According to Dow Jones Market Data, that would be the most significant one-day market-cap increase in Wall Street history – beating the $191.3 billion one-day rise that Amazon.com Inc. scored back in February 2022.
Meta’s stock rally comes after the company announced its first dividend plan the previous afternoon and exceeded expectations with its outlook.
Why Meta’s stock joins the elite club of “MnM”
The results made one analyst think that investors should perhaps ditch the “Magnificent Seven” and join the new fantastic club for tech stocks: “MnM.”
Raymond James analyst Josh Beck agrees, saying Meta’s latest results put it in a select group with Microsoft Corp. and Nvidia Corp. as Big Tech’s frontrunners in the artificial intelligence era.
Nvidia has established itself as the backbone of the AI craze as the company tries to meet the soaring demand for hardware that can run AI models. Microsoft is reaping AI benefits for its Azure cloud-computing business and software portfolio.
According to Beck, Meta’s opportunity is “perhaps less tangible” than those of others. Still, he sees the potential for the Facebook parent company to generate $25 billion to $60 billion in additional revenue from AI and generative AI. That would come from “AI-enhanced engagement and performance gains,” AI-powered messaging chatbots for businesses, and AI tools for marketers that let them create campaigns more efficiently.
Beck rates Meta shares as a strong buy, and his new $550 target price is up $100 from the previous one.
How Meta’s stock plays offence with its AI investments
Wells Fargo’s Ken Gawrelski said Meta’s AI investments showed the company “playing offence,” and he argued they had the potential to boost the stock’s multiple. He rates the stock at overweight with a $536 target price, up from $438.
Meta shares were up 17% in premarket trading Friday and easily on track to hit new record levels. The stock indicated above $460 in premarket action, while its all-time closing high was a $401.02 level set earlier in the week.
How Meta’s stock defies the law of large numbers with its outlook
Evercore ISI’s Mark Mahaney noted that Meta is defying the law of large numbers with an outlook suggesting faster growth in the first quarter.
“We think it’s a matter of at least four powerful product cycles all clicking – AI-enhanced product improvements that are improving engagement/time spent, AI-enhanced product improvements that are improving advertiser [return on ad spend] on the platform, Reels monetization tailwinds, and Click-to-Message ads ramping,” he wrote.
Meta “ain’t your Father’s FB,” Mahaney added, highlighting the company’s $50 billion boost to its stock-buyback authorization and its plans for its first dividend.
“We view these as absolutely the right, appropriate steps for META at this stage in its corporate life and with its $65 billion in cash on the balance sheet,” he said. Mahaney rates the stock as outstanding and increases his price target to $550 from $425.
How Meta’s stock silences critics with its long-term vision
Bernstein’s Mark Shmulik compared the company to Patek Phillipe watches as he praised the company’s long-term vision that helped quiet critics worried about core Facebook’s relevance.