In this video, I will be going over two reasons why you should buy Meta Platforms (META -1.12%) and one reason why you should not.
- Meta isn't dead. In fact, it continues to grow its user base. This is important since the majority of Meta's revenue comes from advertising. But this is also important with regards to AR/VR, more on that in the video.
- Push for AI and Instagram Reels. It's no secret that TikTok has shaken up the social media world with its fast rise during the pandemic.
- Short-form content is here to stay and Reels' growth is proof of that. But it is a double-edged sword. Since Reels are less monetized than the rest of Instagram, in the short term, Reels' success could actually hurt the business.
- In Q1 Reels already made up 20% of the time that people spend on Instagram. In Q2, that number jumped more than 30%.
- Reels also crossed a $1 billion annual revenue run rate, faster than Stories in the same period post-launch.
- The main reason to sell is if you do not believe Meta and its management can turn the ship around and execute on their metaverse mission. It doesn't matter how cheap a stock is, if you don't think they'll make it, don't buy it.
- Meta is probably still feeling the pain of the iOS change but this has pushed the company to rethink everything and will probably be a positive in the long run.
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*Stock prices used were the closing prices of August 16, 2022. The video was published on August 17, 2022.
