Following the stock market's record-breaking run last year, the start of 2025 offers a timely reminder that risk and price volatility are normal parts of the investing process.
Indeed, the Nasdaq Composite (^IXIC +0.19%) has hit correction territory. It's down about 14% from its all-time high (as of this writing) amid renewed concerns over the strength of the economy. One stock that has been caught up in the turbulence is tech and social media giant Meta Platforms (META +0.52%). Despite holding on to a modest 4% gain year to date, shares are down around 15% over the past month.
Is now the time to buy the dip in Meta Platforms stock? Here's what you need to know.
NASDAQ: META
Key Data Points
Overcoming the wall of worry
It's understandable for investors to feel anxious through a stock market correction. The market appears to have stumbled into some areas of macroeconomic uncertainty, reflecting mixed signals on everything from consumer spending, job growth, and the direction of inflation to interest rates, Fed policy, and even geopolitical tensions. Steps by the Trump administration to implement tariffs on imports from U.S. trading partners like Canada and Mexico added to a sense of confusion regarding their duration and effect.
That being said, other than a shift in market sentiment, there's no concrete evidence that economic conditions are deteriorating, or that stocks need to sell off significantly further. Recent developments represent just the latest manifestation of the perennial "wall of worry" stocks will simply need to climb going forward.
For investors, the best strategy to overcome these periods of market volatility is to maintain a disciplined, long-term perspective -- focusing on high-quality companies whose profitability and reliable free cash flow can navigate across different market cycles.
I believe Meta Platforms is one such industry leader able to continue generating profitable growth. The company stands out as not only relatively isolated from trade policy, but also as having a good layer of global diversification.
Image source: Getty Images.
A market leader poised to rebound
2024 was a massive year for Meta, with 22% revenue growth and 61% increase in earnings per share (EPS) for the period ended Dec. 31, an acceleration compared to 2023. While the company's core advertising business is as strong as ever, perhaps the bigger story has been its leadership in artificial intelligence (AI) as a new growth driver.
Meta has found success in using its 3.4 billion-person-strong user base (which it refers to as daily active people (DAP)) across platforms like Instagram and WhatsApp for an increasing level of monetization. AI is playing a key role in that process by optimizing ad targeting, which has already been proven to boost conversions. Meta cites its AI-driven algorithms as working to keep users engaged while unlocking new revenue streams. On top of that, Meta's open-source AI initiatives, including its Llama large language learning model (LLM), highlight the company's ability to stay at the forefront of innovation.
According to Wall Street analysts tracked by Yahoo! Finance, the financial momentum is set to continue, with projected 15% revenue growth this year. The EPS estimate of $25.15 represents a 5.4% year-over-year growth, which considers guidance from Meta planning significant investments toward AI. That said, the two-year trend is still impressive, with room for Meta to adjust spending plans to support profitability.
Overall, the attraction of Meta Platforms as an investment right now is precisely the visibility in this earnings outlook.
| Metric | 2024 | 2025 Estimate |
|---|---|---|
| Revenue | $164.5 billion | $188.5 billion |
| Revenue growth (YOY) | 21.9% | 14.6% |
| EPS | $23.86 | $25.15 |
| EPS growth (YOY) | 60.5% | 5.4% |
Data source: Yahoo! Finance.
In my opinion, what makes the stock even more compelling is its attractive valuation. It's trading at 24 times its consensus 2025 EPS as a forward price-to-earnings (P/E) ratio. This level is below Meta's five-year average for the earnings multiple of closer to 27. That suggests that the stock may be a bargain, considering that its decisively high-tech profile could sustain a more premium valuation.
META PE Ratio (Forward) data by YCharts.
Final thoughts
I'm bullish on Meta Platforms and believe the recent stock market weakness is temporary, with the stock well-positioned to rebound. One strategy that can be useful for investors is dollar-cost averaging as a method of buying shares on dips for your portfolio over time to mitigate near-term risks. Ultimately, Meta is a great option for investors looking to capture high-level themes in AI through a best-in-class tech leader.
