28
March 2024
Meta Platforms
Chris Wehmeyer CFP®
PSG Wealth
Growing up in the East Rand as a child, I remember my dad bringing The Star newspaper home every night. In those days, a newspaper was the main source of news and advertisements. And nothing brought me so much pleasure as reading the paper every day from front to back. I scoured the advertisements as I had an intense desire to purchase an Alfa Romeo Guilia – then selling for about R650. As a young boy I could only dream of one.
Feel free to reach out to PSG Wealth Manager Chris Wehmeyer directly.
People buy the newspaper for the news, sports and markets, but I think the most important reason is for the advertisements. These days, advertisements in the papers are limited to the large supermarket chains and liquor stores over the weekend. In its heyday, Pretoria News had a circulation of 40 000 prints per day. This dwindled to less than 1 000 in 2022, before it stopped printing.
The reason is that the world has evolved into a digital one where news and marketing happen via digital platforms such as Facebook, Instagram and Google.
Meta is the holding company for Facebook, Instagram, Facebook Messenger and WhatsApp. Facebook launched in 2004 in a dormitory at Harvard University, with the aim to connect 500 students. Since then, it has changed the way people connect. Apps like Messenger, Instagram and WhatsApp further empowered billions of people around the world. They also have Reality Labs, which invests in the metaverse. This is a loss-making enterprise but offers exponential growth opportunities in the future.
Meta provides robust targeting options, allowing advertisers to reach their ideal customers based on location, interests, behaviour and more. This is because their algorithms pick up what your interests and shopping requirements are. This level of data detail is unparalleled in the digital advertising space. They will take your last R500 to advertise to a focused group in your suburb, for example.
Meta key statistics:
- In total, 3.96 billion monthly active people (MAPs) access Facebook-owned products including Instagram, WhatsApp and Messenger.
- Facebook, as a stand-alone platform, gets 3.05 billion monthly active users, some of whom may have accounts on other family products.
- WhatsApp, as a stand-alone platform, gets 2 billion monthly active users, some of whom may have accounts on other family products.
- Instagram, as a stand-alone platform, gets more than 2 billion monthly active users, some of whom may have accounts on other family products.
- Last quarter’s investors’ report shows a 6.74% increase in monthly active people year over year.
In the fourth quarter of 2023, Meta generated revenues of US$40.1bn, an increase of 25% driven by an all-time high across every line of business. And 97% of revenue was derived from advertising. The company's net income more than tripled to $14.02bn, or $5.33 per diluted share. The group generated free cash flow of $11.5bn, more than double the previous year. Net cash was $47.0bn as at the end of December.
Meta announced its first-ever quarterly dividend of $0.50 per share. The group "intends to pay a cash dividend on a quarterly basis going forward".
Price | $509 |
Market cap | $1,3 T |
P/E | 29.55 |
1-year performance | 171.7% |
Meta remains very attractively valued considering its growth prospects. We expect that the company will beat expectations for 2024, and continue to provide market-beating returns, even from current levels.
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