Meta Platforms revenue and earnings growth to 'meaningfully outperform,' claims Lightshed Partners

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By Sam Boughedda

Lightshed Partners started Meta Platforms Inc (NASDAQ:META) at Buy with a $200 per share price target on Tuesday.

Analysts there said in their research piece that the firm formerly stayed on the sidelines, but now they believe that Meta's revenue and earnings growth is set to meaningfully outperform investor expectations in 2024 and 2025.

They pointed to factors such as Reels engagement, ad-targeting, CEO Zuckerberg's investor awareness, and the metaverse as positives for the stock.

"Meta's substantial investment in machine learning and AI is starting to pay off. Over the past year, the quality of the Reels user experience has improved dramatically. Instagram (and Facebook) Reels are doing a far better job surfacing recommended content (that you do not follow), driving engagement and creating a far more compelling platform for advertisers," the analysts wrote.

They acknowledged that it still does not have the same level of fun as TikTok but they feel Meta is "clearly driving far better engagement, and the share loss to TikTok appears to be easing."

Meanwhile, Lighshed believes Meta is improving its ad-targeting after Apple (NASDAQ:AAPL) previously altered how advertisers can track behavior. "Meta's investment in building workarounds is bearing an increasing amount of fruit," said the analysts. "While targeting is still meaningfully worse than pre-ATT/IDFA changes, we continue to hear how much Meta's targeting has improved from mid-2022."

Moving on to Meta CEO Zuckerberg, the analysts stated that he has "made many mistakes" but added that he has always "found a way."

"As we move into 2023, there is increasing excitement around VR/AR/mixed reality hardware," continued the analysts. "While we have no idea how to even begin valuing the potential of Meta's investments in mixed reality, we do find it hard to believe it is completely worthless."

While the analysts acknowledged that there will be heavy losses for Meta tied to the metaverse, they believe that by 2025, the firm and investors "will have some understanding of how the metaverse will turn into a business."

"If we are wrong and nothing materializes over the next few years, we believe investors will force Zuckerberg to meaningfully scale back his grand vision."