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Wall Street says Meta stock could rise 8% after huge 1-day market cap inflow

Wall Street says Meta stock could rise 8% after huge 1-day market cap inflow

The stock price of social media giant Meta Platforms (NASDAQ: META), the parent company of Facebook, is soaring after the firm announced fourth-quarter results that exceeded analysts’ expectations.

Indeed, the results indicate that Meta achieved most of the goals outlined by CEO Mark Zuckerberg as part of the “year of efficiency” initiative announced in February 2023. Under this strategy, Meta implemented layoffs and other spending cuts, leading to a remarkably successful effort to reverse the previous year’s revenue declines and share price weakness.

Regarding its share price, the company closed on Friday, February 2, 2024, with a 20% gain within 24 hours, closing at $474.99. On a year-to-date basis, the equity has surged almost 40%.

META YTD price chart. Source: Finbold

The recent uptick in the stock price has propelled Meta’s market capitalization to reach $1.21 trillion, following a single-day inflow of $205.3 billion. According to Bloomberg data, this inflow represents the largest market capitalization gain in a single day for any stock.

According to the data, other notable single-day gains include Apple (NASDAQ: AAPL), which saw an inflow of $190.9 billion on November 10, 2022, and  Amazon’s (NASDAQ: AMZN), which ranked third at $190.8 billion on February 4, 2022. Semiconductor giant NVIDIA Corporation (NASDAQ: NVDA) recorded the fourth-highest gains in history at $184.1 billion on May 25, 2023.

Single-day largest market cap gainers. Source: Bloomberg

Meta riding high after strong Q4 2023 results 

Meta’s strong stock performance follows positive Q4 2023 results, with adjusted earnings per share  (EPS) of $5.33 on revenue of $40.11 billion, surpassing analyst expectations. The company increased its stock buyback by $50 billion.

In Q4, Meta’s advertising revenue reached $38.7 billion, beating the expected $37.8 billion, and Facebook’s daily active users totaled 2.11 billion, exceeding the anticipated 2.07 billion. Ad impressions rose by 21%, while the average ad price fell by 2%. 

Meta’s Reality Labs reported a loss of $4.65 billion, up from $4.3 billion last year, but surpassed revenue expectations at $1.07 billion, beating the expected $812 million.

Despite a 6% YoY growth in Facebook daily active users to over 2.1 billion, Meta will no longer report Facebook user numbers, emphasizing its focus on the larger family of apps with an average of 3.19 billion daily active people in December.

Meta CEO Mark Zuckerberg revealed that Threads, Meta’s competitor to X (formerly Twitter), has reached 130 million monthly active users, indicating growth.

Looking ahead to 2024, Meta plans significant investments in artificial intelligence (AI), with expected capital expenditures between $30 billion and $37 billion. The company also declared its first-ever cash dividend of $0.50 per share and a $50 billion share buyback, aiming to reward shareholders but facing criticism for potentially inflating stock prices without substantial business improvements.

With approximately 350 million shares, Zuckerberg could earn around $700 million in the first year if Meta maintains consistent dividend payouts.

Analyst project upside for META

Elsewhere, based on META’s stock performance in the last three months, 40 Wall Street analysts at TipRanks have provided 12-month price targets for the equity. According to the analysts ‘ consensus, the average 12-month price target for Meta Platforms stands at $513.63. This figure is derived from a high forecast of $575  and a low forecast of $400. 

The average price target reflects an 8.13% change from the last recorded price of $474.99. This suggests an overall positive outlook among analysts, as the consensus anticipates a notable increase in Meta Platforms’ valuation over the next year.

META stock 12-month Wall Street analysts forecast. Source: TipRanks

The analysts are resoundingly bullish on Meta Platforms, as evidenced by their strong buy rating. Of the 40 analysts, 37 recommend buying META shares.

This collective confidence may be attributed to various factors, including Meta’s strategic initiatives, product developments, and overall performance. 

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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