It's been a fantastic year for Meta Platforms (META 2.44%) and its shareholders. The company's stock has more than doubled since 2023 started. Even as broader equities have rebounded, Meta's performance has been impressive. After this run, some might be skeptical as to whether there is more upside to the parent of Facebook, Instagram, and other sites.
However, it's not too late to invest in the stock -- far from it. Let's consider three reasons why the leading social media company is still worth investors' time and money.
1. The advertising market is rebounding
Meta Platforms performed poorly in the first nine months of 2022 as it dealt with a slowdown in ad spending. Fortunately, things seem to have rebounded for the tech giant. In the third quarter, Meta Platforms' revenue of $34.1 billion increased by 23% year over year. That's the highest revenue growth the company has recorded since the third quarter of 2021.
META Revenue (Quarterly YoY Growth) data by YCharts.
Of course, it's nice to see Meta Platforms beat expectations. But what's equally important to remember is that even the best companies will experience challenging periods. This isn't Meta Platforms' first rodeo, and the company once again showed its resilience by bouncing back. That's an excellent sign for investors.
2. Meta Platforms' initiatives are working
Strong top-line growth wasn't the only positive aspect of Meta Platforms' quarterly earnings. The company's cost and expenses decreased by 7% year over year to $20.4 billion.
That's not mere luck. Meta Platforms has made it a point to keep its costs in check over the past year or more. Among other initiatives, the company meaningfully decreased its workforce. We know it did so carefully and efficiently since the downsizing hasn't affected revenue growth. Meta Platforms also reduced its real estate footprints.
The company now projects that its full-year 2023 expenses will be in the $87 billion to $89 billion range, lower than its previous guidance of expenses between $88 billion and $91 billion.
3. There is plenty of growth left ahead
One of Meta Platforms' greatest strengths is its deep ecosystem and its ability to monetize it. The number of monthly active users across the range of Meta's websites and apps was 3.96 billion as of the end of the third quarter, an increase of 7% year over year. Over the past couple of years, Meta has worked on new initiatives that are paying off. Consider the company's Reels, or short-form videos, on Instagram and Facebook.
Meta Platforms has been using artificial intelligence (AI) to drive recommendations and keep viewers glued to their screens. The result? It estimates that Reels has led to a more than 40% increase in time spent on Instagram. Deeper engagement makes the platform more attractive to advertisers.
Business messaging on WhatsApp is also contributing to Meta's growth. The company gave investors a sense of how large an opportunity this could be as it ramps up. Meta Platforms reports that in India -- one of the world's most populated countries -- more than 60% of people message a business account on WhatsApp every week.
Not all of Meta's initiatives are paying off, however. The company's Twitter/X competitor, Threads, has about 100 million users but doesn't seem to be a meaningful contributor to its top line yet.
Elsewhere, although Meta Platforms hasn't given up on the metaverse, its Reality Labs segment is currently operating at a loss. Still, the broader picture encompasses Meta's ecosystem and attempts to squeeze more money out of its user base. Never bet against a company that has billions of users at its disposal.
Why you should buy
Yes, Meta Platforms has been on a tear this year, a well-earned one considering its improving financial results. More importantly, the company's long-term prospects remain solid. WhatsApp monetization is still in the relatively early stages, while thanks to Reels and AI-based recommendations, Meta Platforms is still driving stronger engagement on Facebook and Instagram. Meta Platforms could continue delivering market-beating returns for years, making it an outstanding stock to buy today.
