Since the start of the year, Meta Platforms (NASDAQ:META) stock has nearly doubled in price. Since last November, when META stock briefly traded for as low as $88.09 per share, this social media play has appreciated in value by over 176%.
As I have noted previously, this comeback for shares in the Facebook and Instagram parent has been driven by success with cost-saving measures. These include the implementation of widescale layoffs, as well as the company’s scaling back of its metaverse plans.
However, while improvements to fiscal discipline are already likely reflected in Meta’s valuation, don’t assume that it’s middling returns from here following a “one and done” comeback for the stock.
Shares could add to recent gains in a big way, although chances are these additional gains would arrive much more gradually. What could lead to these additional gains? Let’s dive in and find out.
META Stock: Poised to Level Up
Meta Platforms has made major progress turning itself into a lean, mean, profit-making machine. The stock has zoomed higher as a result. Even so, this positive shift in the underlying story with the company may be poised to continue playing out.
That is, META stock could keep rising. Why? For starters, economic conditions, which have negatively affected digital advertising demand since last year, could normalize over the next few quarters. This alone could get Meta Platforms back to its high-water mark of profitability. In 2021, the company reported earnings of $13.77 per share, versus $8.59 per share reported for the full-year 2022.
That’s not all. Alongside this factor, there are other potential tailwinds/growth catalysts. As Louis Navellier recently discussed, Meta, which has already built-out its artificial intelligence (quickly capitalize on this emerging trend.) infrastructure, may be able to
The latest in its rivalry with TikTok may also signal a growth resurgence for Meta’s flagship platforms. The rollout of the Reels feature on Facebook and Instagram has already resulted in increased engagement. With this, the company is now starting to “cash the check” by monetizing this feature.
Growth Catalysts May Only Need to Partially Play Out
In addition to possible growth resulting from AI and from Reels, there is another potentially game-changing growth catalyst for META stock. However, this catalyst, which has to do with TikTok, is admittedly much more of a longshot. I’m talking about a possible ban of the controversial video-sharing platform.
As you may have just heard, the governor of Montana recently signed into law the first state-level ban of TikTok in the U.S. I wouldn’t base a purchase of this stock on it, but if this ban holds up in court, it could pave the way for other state-level bans of the platform.
It may even lead to a federal ban. This would undoubtedly benefit Meta Platforms, both in terms of market share and revenue. Having said this, a continued surge for META doesn’t hinge on an outright TikTok ban in the U.S. The aforementioned catalysts are likely enough to drive further gains, even if they fail to fully play out.
Moderate success in AI, with Reels, and even with its metaverse efforts could help the company hit the high-end of analyst earnings forecasts for the next two years.
What This Could Mean for Shares
Right now, sell-side consensus calls for Meta Platforms to report earnings of $14.80 per share in 2024, and $16.98 per share in 2025. The high end of these forecasts call for earnings of $17.15 and $19.90 per share, next year and the year after next, respectively.
If META merely sustains its current forward earnings multiple of 21, it may not take long for the stock to re-hit past all-time highs, hit during 2021. In the event the company beats the high end of expectations, and experiences some multiple expansion, hitting $400, $450 or perhaps even $500 per share within the next two years could be within reach.
While the next potential triple-digit move for shares may take some time to play out, META stock remains a strong opportunity for growth investors. Consider it a solid buy today, and a screaming buy on any weakness.
On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.