350 Million Reasons to Buy Meta Platforms Stock After Q1 Earnings

Social media giant Meta Platforms (META) announced its Q1 2025 results after the market closed on Wednesday, April 30. During its earnings call, Meta stated that Instagram Threads has reached a significant milestone, surpassing 350 million monthly active users. This represents an acceleration in growth with 30 million new users added in Q1, up from 20 million in the previous quarter. www.barchart.com This rapid expansion positions Threads as an important asset in Meta’s portfolio. While smaller than its flagship platforms and competitor X (which recently reported over 600 million monthly users), Threads is solidifying its position in the microblogging space. Notably, according to a TechCrunch report, Threads added nearly as many users in a single quarter as competitor Bluesky’s entire user base of approximately 35 million. CEO Mark Zuckerberg highlighted that user engagement is growing alongside user numbers, with time spent on the platform increasing 35% thanks to improvements in recommendation systems. Zuckerberg expressed confidence that Threads is “on track to become our next major social app.”With 3.4 billion people now using at least one Meta app daily, the company continues to expand its reach across multiple social platforms. This gives investors another growth vector to consider as Meta develops additional monetization opportunities through its newest social network.Meta Stock Crushes Estimates in Q1 2025Meta Platforms shares gained more than 4% yesterday following impressive Q1 results demonstrating advertising resilience amid economic uncertainty. The social media heavyweight reported revenue of $42.3 billion, up 16% year over year, beating estimates of $41.1 billion. Its net income growth was higher at 35%, standing at $16.64 billion or $6.43 per share, above estimates of $5.28 per share. Despite macroeconomic concerns around President Donald Trump’s tariff policies, Meta provided steady guidance for Q2, projecting revenue between $42.5 billion and $45.5 billion, which aligns with Wall Street’s $44.03 billion estimate. Meta’s advertising revenue reached $41.39 billion, beating projections. However, the company did note some reduced ad spending from Asia-based e-commerce exporters ahead of the end of the de minimis trade loophole. Analysts view Meta’s performance-oriented advertising platform and AI investments as advantages that should enable continued market share gains.Meta also increased its 2025 capital expenditure forecast to $64 billion to $72 billion from $60 billion to $65 billion, reflecting additional AI data center investments and potential increases in infrastructure costs due to trade uncertainties. This spending boost comes as Meta continues its substantial investment in Reality Labs, which posted a $4.2 billion operating loss on $412 million in revenue during Q1.Meta’s Reality Labs division, responsible for Quest VR headsets and Ray-Ban smart glasses, has accumulated losses exceeding $60 billion since late 2020 as Zuckerberg pursues his metaverse vision. Despite these ongoing investments and recent layoffs in the Oculus Studios unit, Wall Street appears encouraged by Meta’s core business performance and its focus on expanding AI capabilities across its platforms.What Is the Target Price for META Stock?Valued at a market cap of $1.4 trillion, META stock has returned over 620% to shareholders in the last 10 years. Despite its outsized gains, the tech stock trades at a forward price-earnings multiple of 22.5x, below its 10-year average of 25.2x. Wall Street expects Meta to increase adjusted earnings from $23.86 per share in 2024 to $33 per share in 2027. If META stock is priced at 22x forward earnings, it will trade around $725 per share in early 2027, significantly above the current trading price. Out of the 53 analysts tracking META stock, 45 recommend “Strong Buy,” two recommend “Moderate Buy,” four recommend “Hold,” and two recommend “Strong Sell.” The average target price for META stock is $681, around 15% above the current trading price. www.barchart.com On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.