Investors often look for the next big thing, and wonder which stock will become the next trillion-dollar company. But social media conglomerate Meta Platforms (META -4.42%) has already reached that mountaintop. Unfortunately, the stock's staggering downfall has valued the company at roughly $240 billion today.
So can Meta Platforms regain its mojo and bounce back to a trillion-dollar market valuation by 2025? It's hard seeing any stock rising four-fold any time soon in this market, but Meta's potential recovery isn't as farfetched as it sounds once you dig into the numbers. Here is what investors need to know.
Falling from grace
Sometimes you need to look backward before moving forward. Investors should understand Meta's sharp decline, because it goes beyond today's bear market. Meta's struggles come primarily from Wall Street's worries over Meta's aggressive investments in Reality Labs. CEO Mark Zuckerberg believes in the metaverse, and sees a big opportunity for Meta when (or if) it becomes mainstream.
You can see below just how much Meta's spending has increased. The money spent on Reality Labs hasn't yet produced any returns for shareholders -- in fact, the business segment has lost $9.4 billion year-to-date. Zuckerberg signaled during the company's earnings call that spending would increase in 2023.
META Capital Expenditures (TTM) data by YCharts
Add in a downcycle in advertising spending spurred by recession fears, and Wall Street is seemingly more negative on Meta Platforms than possibly at any time in the company's history. That sentiment is reflected in Meta's valuation, which at a price-to-earnings ratio (P/E) of 8.6 is its lowest ever.
The journey to $1 trillion
So how do you go from a beaten-down stock that nobody likes to a trillion-dollar company by 2025? First, remember that a company's share price doesn't necessarily reflect the quality of the business. Yes, Meta's dealing with challenges right now, but Wall Street believes that Meta's profits will still grow over time. A consensus of analyst estimates calls for Meta's earnings-per-share (EPS) to increase a total of 33% over the next several years and hit $12 by 2025.
One would hope that Meta's business will right itself by then; the advertising industry is cyclical, and should rebound with the economy. Reality Labs could look a lot different by then versus today, and perhaps Wall Street will again love Meta Platforms.
Meta needs a share price of approximately $379 to hit a $1 trillion market capitalization using the current number of outstanding shares. The company routinely repurchases shares, but let's assume that analysts factored that into their EPS estimates. Hypothetically, if Meta did earn $12 per share and traded at its median P/E over the past decade of 34 P/E, the resulting share price would be $408, enough to reach the target $1 trillion market value.
Remember this
Successfully achieving this would mean investors got a four-fold return on their investment if they bought shares today. That's an excellent return, probably beating the market over those years.
But this exercise isn't necessarily to split hairs about whether Meta will or won't be worth a certain amount by a specific year. Instead, it's a thought exercise that shows you just how attractive Meta's stock has become. If it hits analyst EPS estimates, the stock could maintain its current bottom-of-the-barrel P/E and still return 33% over three years.I would argue that a lot has gone wrong if sentiment (reflected by P/E) doesn't budge an inch higher over the next three years.
The most likely outcome seems that Meta's ad business eventually picks back up, and Zuckerberg extracts at least some value out of Reality Labs. The bar is pretty low here, which is why Meta's stock is so compelling at these prices. You don't need a home run; hitting a single to first base can still be a very successful investment, and anything beyond that is icing on the cake.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms, Inc. The Motley Fool has a disclosure policy.
FAQs
Key Points. Meta rejoined the trillion-dollar club earlier this year. Its advertising business is recovering and its margins are expanding again. It has a narrow but viable path toward hitting a $2 trillion valuation by 2025.
What will Meta stock be worth in 2025? ›
Meta stock prediction for 1 year from now: $ 581.59 (20.90%) Meta stock forecast for 2025: $ 629.86 (30.93%) Meta stock prediction for 2030: $ 2,423.37 (403.75%)
Is Meta worth investing in 2024? ›
Meta stock forecast 2024
Analysts are optimistic about Meta's business and stock price this year, projecting full-year earnings per share of $19.92. That's up from $14.51 in 2023. In addition, Meta analysts are calling for $158.2 billion in 2024 revenue — a whopping annual growth of 17.3%.
What will Meta stock be worth in 2040? ›
Meta Stock Price Prediction 2040
Based on our analysis of META stock's average growth over the past decade, our prediction suggests that the stock will be valued at $5500-$6050 by 2040.
How high can meta platform stock go? ›
META Stock 12 Month Forecast
Based on 43 Wall Street analysts offering 12 month price targets for Meta Platforms in the last 3 months. The average price target is $547.45 with a high forecast of $610.00 and a low forecast of $430.00. The average price target represents a 9.54% change from the last price of $499.76.
How high will Meta stock go in 2024? ›
Today's Stock Price: META stock is trading on NASDAQ, current market price is $505.03. 2024 Forecast: Analysts predict a median 12-month forecast for Meta stock at $400.00, with a range from $384.00 to $470.00. This estimation suggests a potential increase of 18%, reflecting market optimism and earnings potential.
What will Meta be worth 2030? ›
If Meta matches those estimates and continues to grow its bottom line at a compound annual rate of 15% from 2026 to 2030, its EPS could rise to $46.70. If its forward multiple remains roughly the same, in early 2030, its stock could be trading at about $1,120, giving it a market cap of nearly $2.8 trillion.
Is Meta a good long term stock? ›
META has a Growth Style Score of B, forecasting year-over-year earnings growth of 34.6% for the current fiscal year. For fiscal 2024, two analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.19 to $20.01 per share.
How much will Meta stock be worth in 5 years? ›
Meta Platforms Inc. quote is equal to 481.070 USD at 2024-04-21. Based on our forecasts, a long-term increase is expected, the "META" stock price prognosis for 2029-04-13 is 615.740 USD. With a 5-year investment, the revenue is expected to be around +27.99%.
What will the Meta stock price be in 2026? ›
META Stock Price Prediction 2026: In 2026, META's stock price is projected to average at $494, with a range between $456 and $532. META Stock Price Prediction 2030: Looking ahead to 2030, the prediction averages at $865, with a range between $798 and $931.
META stock forecast 2050
With that in mind, the annualized return from both the QTEC and the S&P 500 is a more reasonable benchmark over this time frame. META would be worth $21,581 using QTEC's rate of 15.2%, while it would be valued at $8,172 using the same metric from the S&P 500.
How much will Tesla stock be worth in 2025? ›
Projections on Tesla's stock peak diverge. An upbeat view from TipRanks analysts hints at a $229 average price target, while Long Forecast foresees an increase to around $332 by the end of 2025.
Is Meta worth investing in now? ›
A reasonable valuation
But Meta's stock still trades at a compelling valuation, even after it has soared in the past year and a half. The current forward P/E of 26 is a reasonable entry point given the scale and reach of the company's social media apps, its tremendous network effects, and the focus on AI.
What is a fair value for Meta Platforms stock? ›
As of 2024-04-22, the Fair Value of Meta Platforms Inc (META) is 318.38 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 481.07 USD, the upside of Meta Platforms Inc is -33.8%.
What is the future of Meta Platforms stock? ›
Based on short-term price targets offered by 40 analysts, the average price target for Meta Platforms comes to $516.20. The forecasts range from a low of $285.00 to a high of $600.00. The average price target represents an increase of 3.19% from the last closing price of $500.23.
Can Meta Platforms stock reach $400 levels? ›
Bottom Line. The answer to our question is - "Yes, Meta can get to $400 in 2024".
Will Meta hit $500? ›
At the start of last month, Meta Platforms (NASDAQ:META) hit $500 per share, a major share price milestone.
Is Meta stock expected to grow? ›
Analysts say annual earnings will likely fall 15% this year, with growth ramping back up in 2025, up 37%.
Is Meta a buy or sell? ›
Meta Platforms has an Earnings ESP of +0.62% and a Zacks Rank #2 (Buy).
