Shares of Meta Platforms Inc. rose. Up 20% in Friday trading, an impressive rise for a company of this size, and hitting several milestones in the process.
To start, Meta shares META,
Easily set a new record. The stock ended the session at $474.99, while the current record closing level was $401.02 set earlier this week.
opinion: Meta stuns Wall Street with its first earnings. Amazon and Alphabet could be next.
But Meta's market cap gains became even more pronounced, as the company added $204.5 billion to its valuation that day. That represents the largest single-day market cap in Wall Street history, according to Dow Jones Market Data — surpassing the one-day gain of $191.3 billion by Amazon.com Inc. AMZN,
It was assembled again in February 2022.
Meta stock's strong rise came after the company announced its plans the afternoon before to pay its first dividend, while beating expectations with its expectations.
The results prompted one analyst to think that perhaps investors should forget about the 'magnificent seven', as the new hot club for tech stocks is 'MnM'.
That's the view of Raymond James analyst Josh Beck, who said the latest Meta results put it in the elite camp with Microsoft's MSFT.
And NVDA,
As leaders of major technology companies in the age of artificial intelligence.
Nvidia has proven to be the backbone of the AI craze as the company struggles to keep up with growing demand for its hardware that can run AI models. Microsoft sees the benefits of AI for its Azure cloud computing business as well as its software suite.
The meta opportunity is “probably less clear” than those other opportunities, according to Beck, but he sees the potential for Facebook's parent company to unlock $25 billion to $60 billion in additional revenue from AI and generative AI. This will come through “AI-powered engagement and performance gains,” AI chatbots for businesses and AI tools for marketers that allow them to create campaigns more efficiently.
Beck rates Meta shares a Strong Buy, and his new $550 price target is $100 higher than previously.
Wells Fargo's Ken Jawrelski said Meta's investments in AI showed the company is “playing an offensive role,” and said they have the potential to expand stock multiples. He rates the stock overweight with a price target of $536, up from $438 previously.
Meta shares rose 17% in pre-market trading on Friday and are easily on track to reach new highs. The stock was pointing above $460 in pre-market action, while its all-time closing high was the $401.02 level set earlier in the week.
Mark Mahaney of Evercore ISI noted that Meta is fighting the law of large numbers with expectations pointing to an acceleration in the first quarter.
“We believe it comes down to at least four strong product cycles – AI-powered product improvements that improve engagement/time spent, and AI-powered product improvements that improve advertisers [return on ad spend] On the platform, Reels monetization tailwinds, and click-to-message advertising are on the rise.
Meta is “not your father's Facebook,” Mahaney added, also highlighting the company's $50 billion increase in stock buyback authorization and its plans for its first dividend.
“We consider these to be the right steps and entirely appropriate for META at this stage of its corporate life and with $65 billion in cash on its balance sheet,” he said. Mahaney rated the stock outperform and raised the price target to $550 from $425.
Bernstein's Mark Shmulik likened the company to Patek Philippe watches as he extolled the company's long-term vision that helped silence skeptics worried about Facebook's fundamental importance.
“The Meta suite continues to expand (Threads, Quest), while newer AI initiatives show promise for a lasting future,” he wrote, maintaining an Outperform rating but increasing the price target to $535, $100 higher than previously. Perhaps just like Patek's famous slogan, “You never own the Meta shares, you only look after them for the next generation.”
