Meta Platforms (META -1.38%) has been lambasted by investors and Wall Street analysts this year for its intense focus on developing a virtual world: the metaverse. Its Reality Labs segment burned over $9.4 billion on the project in 2022 alone, denting the company's earnings at a time when its business is already suffering the effects of the weak economic environment.

But I want to focus on Meta's family of apps -- which includes Facebook, Instagram, and WhatsApp -- because they still bring in 98% of the company's revenue. Meta is releasing swathes of new features across these flagship platforms, proving its innovation engine is alive and well.

Investors should pay attention because Meta Platforms stock is down 66% from its all-time high. That might be a big long-term opportunity if the company's recent changes resonate with users, and its track record suggests they will.

Social media has changed forever

If you regularly use Facebook and Instagram, you've probably noticed that your experience has changed drastically over the last year or so. Those platforms once centered around social networking, encouraging users to connect with people they know because that drove engagement.

Lately, however, feeds are increasingly curated by artificial intelligence (AI) designed to push entertaining content to users from any source the algorithms deem relevant -- with posts from family and friends becoming almost secondary to the experience.

This shift stems from the success of ByteDance's TikTok, the short-form video platform sweeping the globe. It has become the fastest-growing app in history and already boasts well over 1 billion monthly active users (MAUs). They're also incredibly young, with over 60% of the user base younger than 29.

While Meta Platforms attracts over 3.7 billion MAUs across its family of apps, TikTok presents the same existential threat to the company that Facebook did to MySpace, and we all know how that turned out.

Meta unleashes Reels, Candid Stories, and Notes

Meta's direct response to TikTok is called Reels. If you want to know how seriously Meta is taking the short-form video revolution, just look at the main navigation menu at the bottom of your Instagram app -- you'll notice Reels sits dead center. Across Facebook and Instagram during the third quarter (ended Sept. 30), users viewed Reels 140 billion times each day, a 50% jump from just six months ago.

The format has been live globally for under a year at Meta, yet it already has a $3 billion annual revenue run rate.

On Instagram, the social networking aspect centers more on user stories and the messaging tool, wherein the platform is rapidly rolling out brand-new features. One of them, called Candid Stories, allows users to capture spontaneous photos through the existing stories function. Users can take pictures using the front and back cameras at a specific time each day, which will be shared with friends who are also participating.

If this sounds familiar, it's because the concept is borrowed from the popular new BeReal social platform. Instagram's stories feature monetizes at a higher rate than Reels, so developing this new way for users to engage could boost revenue over the long term.

Notes is another new Instagram feature aimed at driving more intimate engagement through the platform's messaging tool. It allows users to post status updates (limited to 60 characters) that serve as prompts to which their connections can respond through direct messages.

Two excited friends taking a selfie at a sunny European location.

Image source: Getty Images.

What all this means for Meta's struggling stock price

As mentioned, the focus on the metaverse has extinguished some of Meta's earnings power. Its third-quarter net income (profit) fell 52% year over year to $4.3 billion -- though the company's revenue was down just 4% over the same period, clearly highlighting that this is a spending problem.

But Meta has recently committed to trimming costs. Investors sent the stock higher in November when the company announced it was laying off 11,000 employees, as they hoped it would mark the beginning of a more cost-conscious approach, at least while the economy remains weak.

Advertisers are skittish about spending money now because they fear a lower return on their investment as consumers have less disposable income. But headwinds like high inflation and rising interest rates might be in the early stages of peaking, which would result in a more positive outlook next year.

That could arrest the decline in Meta's stock price in the short term, but only the company's long-term initiatives will be responsible for driving a renewed trend higher. Meta has a history of rapidly adapting to new competitive threats; its stories feature is one of its most successful, developed in response to the rise of Snap Inc's Snapchat platform.

Therefore, investors have every reason to believe Reels, Notes, and Candid Stories will form the next phase of growth and monetization for Meta's family of apps.

With the company's stock down 68% from its all-time high, it trades at a price-to-earnings multiple of just 11.1, 51% cheaper than the Nasdaq-100 technology index. That spells opportunity at a very attractive discount, especially for investors with a long-term mindset.