Meta Platforms Sees Growth Despite Reality Labs Losses, Stock Remains Attractive

Despite a recent 14% drop in the last month, Meta Platforms remains a high-conviction growth stock. Meta's family of apps, including Instagram, Facebook, and WhatsApp, are attracting advertisers due to increased user engagement, especially on Instagram's Reels. Instagram's Reels are taking market share from Google Search. Meta's revenue and earnings have rebounded to all-time highs after a dip in 2022 and 2023. The company's Reality Labs division lost $17.73 billion in 2024, impacting overall income. Meta finished 2024 with approximately $49 billion in net cash. Meta's stock trades at a discount to the S&P 500, with a price-to-free-cash-flow ratio of 29.2 and a price-to-earnings ratio of 25.3.