The last six months have been tumultuous for Meta Platforms (META -4.13%). Stock in the Facebook parent company has declined 47% from its all-time high amid a broader sell-off in the tech sector, in addition to a fourth-quarter 2021 result that wasn't well received by investors. 

In response, CEO Mark Zuckerberg highlighted a series of long-term initiatives in the company's first-quarter conference call of 2022, and he reminded investors that it's not the first time his company has evolved to suit new ways that users are engaging with the digital world. 

Thanks to new, advanced technologies, the future might be brighter than ever for the social media giant. Here's why. 

A person using a virtual reality headset while sitting in a cafe.

Image source: Getty Images.

More (artificially) intelligent experiences

Meta Platforms has a history of shape-shifting. Facebook began as a social network connecting people based on their interests. Then, when photos became the most popular way to share online, the company acquired Instagram. Video followed, with Snap having major success with its Snapchat Stories concept. Meta Platforms adapted by building a similar feature into both Facebook and Instagram.

But no competitor has been quite as threatening as China-based ByteDance, which owns TikTok, a short-form video platform taking the world by storm. It's the fastest-growing app in history, amassing 315 million downloads in a single quarter during 2020. TikTok has captivated younger audiences with over 50% of its user base between 10 and 29 years old, spending 52 minutes a day on the platform on average.

Meta has added its own short-form video feed into Facebook and Instagram called Reels. But there's a far more valuable lesson from TikTok's dominance: Users have no idea what they want. Short-form video is the vessel TikTok and Reels use to deliver content, but artificial intelligence (AI) sits in the background curating the entire experience. 

Social media has become less social -- people open TikTok and rely on the app to know what they're interested in, even if the content isn't made by someone they know. It's about entertainment.

Based on how users interact with certain videos, including how long they spend watching and whether they like or comment on them, AI works behind the scenes to either show them more or less of the same style of content. Meta says Reels makes up 20% of the time users now spend on Instagram, so it's growing rapidly, and Zuckerberg says the company is investing heavily in its AI models to improve the experience.

Meta also thinks this will result in greater monetization in the long run. It's using AI to more accurately target users with advertising, overcoming challenges caused by Apple's privacy changes in 2021, which have hit Meta's revenue

All eyes on the metaverse

Improving Reels is a short-to-medium-term project, but the metaverse could own the next decade and beyond. It's a collection of virtual worlds where people exist as avatars of themselves to interact both socially and professionally, and Meta is jostling to lead the development of this enormous undertaking. Estimates are wide-ranging, but the metaverse could be a $1.6 trillion to $30 trillion financial opportunity beyond 2030.

Investors have been concerned by Meta's staggering expenditures on this project. Its Reality Labs segment, which handles all things metaverse related, spent $10 billion in 2021 and followed that up with a near-$3 billion loss in the first quarter of 2022. Given the potential rewards, these don't sound like big numbers, but they will continue to detract from Meta's financial results in the short term.

For example, Meta's revenue increased 7% year over year to $27.9 billion in the first quarter, but it saw a 21% decline in net income to $7.4 billion. Had Reality Labs operated at breakeven instead of producing a $3 billion loss, it might have catapulted the company's net income into growth territory. But again, this is a long-term opportunity.

In the company's conference call, Zuckerberg spoke about a high-end virtual reality headset being developed under the code name Project Cambria that is slated for release later this year. The goal of this hardware is to replace the traditional workstation, with employees immersed in the metaverse rather than operating from their laptops. 

Meta is working hard to improve the feeling of "presence" inside the virtual world, and this could connect teams across borders unlike ever before.

While investors might have to pay a price for these innovations in the short term, Meta stock is incredibly cheap at just 14 times 2021 earnings. It's about a 51% discount to the Nasdaq 100 index, which trades at a multiple of 30, so it could be the perfect opportunity to take a long-term position.