How to Invest in Facebook (Meta) and Why
The relatively newly christened Meta Platforms is the parent company of Facebook, Instagram and WhatsApp, and is one of the largest companies in the world by market capitalisation. But is Meta a good stock to buy in 2024?
In this article, we will take a look at the prospect of investing in Meta Platforms before demonstrating how to buy Facebook shares.
Table of Contents
A Short History of Meta Platforms
What began as a site designed to connect people at Harvard University has evolved and spread around the globe. Before we take a look at how to invest in Facebook, let’s take a quick look at some of the highlights of its history.
- 2004: TheFacebook is launched by Mark Zuckerberg and fellow student Eduardo Saverin as a way for undergraduate students at Harvard University to connect.
- 2006: Facebook is made accessible to the general public.
- 2012: In April, Facebook acquires Instagram for $1 billion before going public via an Initial Public Offering (IPO) in May.
- 2013: Facebook shares added to the S&P 500.
- 2014: Acquisition of WhatsApp for $19 billion.
- 2021: Facebook rebrands to Meta Platforms signalling the company’s intent to pivot more towards developing the metaverse.
Meta Earnings
When you buy Facebook shares, you are essentially buying a part of the company. Therefore, before deciding whether or not to invest in Facebook, amongst other things, it is important to take a look at the company’s fundamentals, to understand how the company is performing and how it generates its income.
In the table below, we have highlighted some of the key indicators from the company’s earnings report for the third quarter of 2023.
Source: Meta Platforms – Third Quarter 2023 Results
Meta Stock Analysis
For a long time, Facebook founder Mark Zuckerberg resisted taking the company public, whilst also rejecting a number of buyout offers.
By the time the company eventually did go public in 2012, it already reportedly had 845 million active monthly users and was valued by underwriters at more than $100 billion. At the time, this was the largest valuation for a newly public company ever.
Looking back over the last five years - following a string of scandals and other events in 2018, which caused share price to drop 26% - Meta Platforms’ share price continued its long-term upward trend. Despite a steep setback at the outset of the Covid-19 pandemic in 2020, Meta shares soared more than 160% in the three year period ending 31 December 2021.
However, things changed abruptly in 2022. Amidst a challenging economic environment - with soaring inflation, rising interest rates and an uncertain outlook – Meta shares plummeted 64%, hitting a seven year low in the process. This decline was far more profound than the wider S&P 500’s drop of 19% over the same time period.
Tough economic conditions meant advertisers reined in spending, hitting Meta’s earnings. Furthermore, at the beginning of the year, daily active users fell for the first time in the company’s history. But, all this aside, one of the things which spooked investors the most was how much money Zuckerberg and Meta were pouring into the metaverse.
In 2022, losses emanating from Reality Labs, Meta’s metaverse segment, totalled $13.7 billion, down from $10.2 billion the previous year. At a time when revenue was broadly flat and inflation was pushing up operating expenses, burning this amount of cash was unpalatable to investors.
However, improving economic circumstances and earnings have helped Meta’s share price recover much of its lost ground in 2023, although it remains below its all-time high at the time of writing.
Nevertheless, rising revenue and lower costs have masked the fact that Reality Labs continues to be a drain on income. In the first nine months of 2023, the segment reported a loss of $11.5 billion, more than 20% deeper than the same period last year.
Trade Meta Stock CFDs with Admiral Markets
Do you think Meta shares will fall again?
With a Trade.MT5 account from Admiral Markets, you can trade Contracts For Difference (CFDs) on Meta stock and over 3,300 other shares around the world! CFDs allow traders to attempt to profit from both rising and falling prices by going long and short. Furthermore, CFDs also benefit from the use of leverage! Click the banner below to open an account today:
Is Meta a Good Stock to Buy?
As with any investment, the answer to this question is going to come down each individual. Before making any investing decision, you should conduct your own research and consider what you are aiming to achieve from investing.
We have already noted how much money Meta is pumping into the metaverse. From the beginning of 2020 until 30 September 2023, Meta’s Reality Labs division has lost a total of $42 billion. That’s a lot of money.
If the metaverse ends up being a success, onlookers may reflect on this as money very well spent and hail Zuckerberg’s extraordinary vision. However, if it fails, it’s going to be an incredibly expensive mistake.
Looking beyond the black hole which is Reality Labs, one metric which really stands out in Meta’s earnings isn’t a financial one, but the number of people that use the company’s family of applications. On average, 3.14 billion people use one of these applications on a daily basis. On a monthly basis, that figure goes up to 3.96 billion.
Those numbers really are quite remarkable. Considering there are around 8 billion people on the planet, that means almost 50% of the world’s population use one of Meta Platforms’ applications on a monthly basis.
This explains then why Meta is such a desirable place for advertisers, and why it generates 18% of digital advertising revenue worldwide. The only other company in the world which boasts this kind of global reach is Google.
As long as Meta can continue to hold a captive audience of this size, it will be well-placed to benefit from increasing spending on digital advertising worldwide, which is forecast to hit $900 billion in 2028, up from $694 billion 2023.
How to Buy Facebook Shares
With an investing account from Admiral Markets, you can buy Facebook shares and invest in more than 4,500 other companies from around the world. Follow these steps to get started:
- Open an Invest.MT5 account.
- Log in to the Dashboard.
- Click ‘Invest’ next to your account details to open the web trading platform.
- Search for Facebook stock and click the stock symbol to open a price chart.
- Press ‘Create New Order’, enter the number of Facebook shares you want to buy and click ‘Buy’!
How to Invest in Facebook for Only $50
As well as investing in more than 4,500 companies and over 200 Exchange-Traded Funds (ETFs), owners of an Invest.MT5 account also benefit from the ability to buy fractional shares in more than 700 of the world’s top companies, including Meta Platforms (Facebook)!
With fractional shares, you can buy portions of stocks in increments of 0.01. Click the banner below to find out more:
FAQ - Investing in Facebook
When Did Facebook Go Public?
Facebook went public via an Initial Public Offering (IPO) on 18 May 2012. It raised $16 billion, making it the third largest IPO in US history at the time.
What Was Facebook IPO Price?
Facebook’s IPO price was $38 a share.
Who Underwrote Facebook IPO?
The lead underwriters for Facebook’s IPO were Morgan Stanley, JP Morgan and Goldman Sachs, with 28 other banks names as underwriters in the IPO.
What Stock Exchange Is Facebook Listed on?
Facebook, now Meta Platforms, is listed on the Nasdaq and trades under the ticker symbol META (having previously traded under FB).
Does Meta Pay Dividends?
Meta Platforms does not currently pay a dividend and has not announced any plans to do so in the immediate future.
How Many Shares of Facebook Are There?
As of 20 October 2023, there are 2,219,607,026 shares outstanding of Meta class A common stock and 350,255,706 shares outstanding of Meta class B common stock.
Can I Buy Facebook Shares in UK?
Yes, it is possible to buy shares in Facebook (Meta Platforms) in the UK. In order to do so, you must register with a broker which provides access to the US stock market, such as Admiral Markets.
Other articles you may find interesting:
- How to Buy Disney Shares and Why
- How to Buy Tesla Shares and Why
- How to Buy Microsoft Shares and Why
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets trademark (hereinafter “Admiral Markets”) Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
- With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
- Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
- Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
