If I’d put £10,000 into Meta stock at the start of 2024, here’s what I’d have now

Our writer looks at the year-to-date performance of Meta stock and considers whether he’d consider buying this magnificent tech share.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Meta Platforms

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Meta Platforms (NASDAQ: META) stock has been on fire recently. Indeed, since the last time I wrote about the social media giant in early 2024, its market cap has soared to $1.28trn.

Unfortunately, I’ve never owned Meta (formerly Facebook) shares. They’re up 1,218% since going public in May 2012. So would I consider buying some today?

Big gains

At the start of 2024, the Meta share price was $353. Today it’s $504. That translates into a monster return of 42.7% and demolishes the S&P 500‘s 14.7% (excluding dividends).

Should you invest £1,000 in Meta Platforms right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Meta Platforms made the list?

See the 6 stocks

It means a £10k investment made at the start of the year would now be worth £14,270 on paper.

There would have been a small dividend too, enough to get some bread and milk, as the firm declared in February that it would start paying quarterly dividends.

The starting yield may be small today at 0.4%, but Meta strikes me as the sort of company that could grow its payouts substantially far into the future.

According to The Guardian, founder and CEO Mark Zuckerberg stands to take home $700m (£549m) in the first year thanks to his 350m Meta shares. That’s certainly not bread-and-milk money!

Created with Highcharts 11.4.3Meta Platforms PriceZoom1M3M6MYTD1Y5Y10YALL17 Jun 201917 Jun 2024Zoom ▾Jul '19Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '242020202020212021202220222023202320242024www.fool.co.uk

Growth continues

In Q1 to 31 March, Meta’s revenue climbed 27% year on year to $36.4bn. Ad impressions were up 20% and the average price per ad rose 6%. It generated a massive $12.5bn in free cash flow, up from $6.9bn the year before.

Facebook, Instagram, and WhatsApp aren’t declining in popularity by any stretch. In fact, their daily active users increased 7% to hit a whopping 3.24bn. That’s approaching half the global population!

One issue was that capital expenditure for 2024 is anticipated to be $35bn-$40bn, higher than the original estimate of $30bn-$37bn. The reason is increasing investments in artificial intelligence (AI).

After this report, the stock dropped 16%. However, it has since clawed back those losses and added another 2% on top.

Chinese e-commerce spend

In 2023, online marketplace Temu was reportedly Meta’s top advertising spender. The firm splashed $2bn on digital ads across Facebook and Instagram to reach shoppers in the West and elsewhere. Shein was also a significant buyer of advertising.

The problem here is that if China-based advertisers pull back on spending, that could impact Meta’s earnings growth. This is worth bearing in mind, I’d say.

Having said that, the maturing Chinese e-commerce market should encourage more marketers there to expand abroad to reach new customers. Meta still attracts approximately 82% of all social media ad spending, so is in the sweet spot in this regard.

Worth me buying?

Analysts forecast that the company will grow its earnings by around 19% over the next few years. And that’s despite its cash-incinerating metaverse segment (Reality Labs) dragging on profits!

As for valuation, we’re looking at a forward price-to-earnings (P/E) multiple of 24.5. That compares favourably with other Magnificent Seven stocks like Nvidia (48.1), Microsoft (37.1), Amazon (39.3) and Tesla (64).

Looking ahead, Meta appears incredibly well-positioned in AI. The amount of data it possesses is mind-boggling, giving it a huge advantage when training and deploying AI tools. These can help advertisers optimise their marketing spend, for example.

If I had spare cash to invest in June, I’d happily add Meta stock to my portfolio.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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. Ben McPoland has positions in Tesla. The Motley Fool UK has recommended Amazon, Meta Platforms, Microsoft, Nvidia, and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young Asian woman with head in hands at her desk
Investing Articles

As the S&P 500 struggles to recover, here’s what Warren Buffett’s doing

The S&P 500 is fighting to regain its February highs amid ongoing trade tariff uncertainty. Our writer looks to the…

Read more »

Investing Articles

When will Lloyds shares hit £1?

Lloyds shares have surged over the past 12 months, but where will they go next? Dr James Fox thinks there’s…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Stock-market crash: the meltdown of the Magnificent 7

Just before Christmas, these Magnificent Seven stocks were riding high. But after the worst quarter for US stocks since autumn…

Read more »

Investing Articles

Wow! IAG shares are undervalued by 47%, according to analysts

IAG shares have surged over the past 18 months, but analysts are pointing to more growth. Dr James Fox takes…

Read more »

Investing Articles

2 cheap FTSE 100 and FTSE 250 shares to consider for an ISA before 5 April!

These FTSE 100 and FTSE 250 shares are on sale today! Here's why long-term Stocks and Shares ISA investors should…

Read more »

Investing Articles

How I’m building a new second income for 2035

Millions of us invest for a second income. Here are the steps Dr James Fox is taking in order to…

Read more »

Investing Articles

At a 52-week low but forecast to rise 73%! Is this growth share the FTSE’s top recovery play? 

This FTSE 100 growth share has taken an absolute beating over the past two years but Harvey Jones says the…

Read more »

Investing Articles

This FTSE 250 share offers a juicy 9.8% yield. Will it last?

This well-known FTSE 250 share has a percentage dividend yield approaching double digits. Should Christopher Ruane add the income share…

Read more »