The Motley Fool has positions in and recommends Apple, Meta Platforms, and Roblox. Before delving into the uncertain future of AR/VR (or as Apple calls it, spatial computing), let’s acknowledge that neither of these tech giants are firing on all cylinders. For Meta, it’s still dealing with a downturn in digital advertising.
- Furthermore, it’s conceivable that management identified the issues and has already created plans to fix them.
- With one of the biggest studio acquisitions in recent years, the company could potentially change the video game landscape through its presence in the Metaverse.
- With little under $1 billion in planned yearly revenue this year, Cloudflare is still in the very early stages of its development story.
- Meta seems capable of sustaining such outstanding growth, especially considering that it could keep winning more share in the digital ad market with the help of AI.
- Consequently, it made it seem like a fad — expensive equipment that will never replace PC and mobile gaming.
Metaverse stocks are shares of companies that are involved in developing the metaverse. Many companies are involved in the metaverse, including video games, social media, online service providers, and more. We’re coming off a volatile year for the stock market, including bear market dips that have certainly tested investors’ mettle. But when looking for the best stocks to buy right now, investors should still consider long-term performance, not short-term volatility. To help with that, we’ve compiled a list of the best stocks in the S&P 500, measured by one-year return. The family of apps division generated revenue of $31.7 billion in Q2, with a 41% operating margin.
In February of that year, Facebook filed for an initial public offering (IPO), which valued the company at $102.4 billion. There are already signs that operating income is moving higher as the company has taken a number of steps to cut costs this year, which should help lift ROIC. Since its IPO in 2013, META stock has risen sharply, reaching an all-time high of nearly $380 (split-adjusted) in the Fall of 2021, after a rocky 2018. However, 2022 saw the company’s stock fall more than 60%, hitting levels not seen since 2015. John Schmidt is the Assistant Assigning Editor for investing and retirement. Before joining Forbes Advisor, John was a senior writer at Acorns and editor at market research group Corporate Insight.
Meta Platforms’ stock is on track to benefit from a couple of solid catalysts.
The company is classified as a member of the communications services sector. It competes with other companies that offer online and communication products and services. Its rivals include Alphabet Inc.’s (GOOGL) Google and YouTube, as well as Apple Inc. (AAPL), and Twitter Inc. (TWTR). Meta generated net income of $39.4 billion on $117.9 billion of revenue in FY 2021. A high ROIC has long been evidence of the strength of its advertising, the efficiency of the company’s business model, and its ability to generate high returns. Look for return on invested capital to start expanding as the company tames its expenses and grows revenue.
- Buying shares of Meta Platforms is just one way of adding the company to your portfolio.
- Likewise, investors can track the DJIA with an index fund tied to that benchmark.
- Before joining Forbes Advisor, John was a senior writer at Acorns and editor at market research group Corporate Insight.
- Take a look at our answers to the most frequently asked questions about stocks in the metaverse.
The ongoing recovery in online advertising aside, there are other catalysts that could propel Meta Platforms stock higher. If you invested $1,000 into Facebook’s stock at its IPO, that investment would have grown to more than $7,500 in value as of mid-2023. Explore opportunities for investing in Stripe, and fp markets review the ins and outs of this payment processing company. This acronym describes prominent tech companies that are essential to the S&P 500. The company unveiled a restructuring program in late 2022 to cut costs. It’s consolidating facilities, laying off employees, and canceling several data center projects.
There is also a key difference between the ABR and Zacks Rank when it comes to freshness. Meanwhile, Apple’s financial benefit from Vision Pro is a bit more of a mystery at this point. Meta stock currently trades for 23 times Wall Street’s expectations for 2023 earnings per share (EPS), and 18 times 2024 expected EPS.
Revenue
These kinds of funds pool large numbers of stocks together in a single fund, making them less risky than individual stocks. Tech stocks with an “A” rating can have a record of consistent earnings growth, which can translate into attractive long-term returns for investors. Tech stocks also often benefit from network effects, as their products or services become more valuable as more users adopt them. This is a formula for expanded growth and sustained market dominance. When you’re looking for good investment options in the fourth quarter, top tech stocks should be at the top of your list. And the best way to evaluate tech stocks is by using the Portfolio Grader.
Meta’s bet on the metaverse
While you can’t invest specifically in Facebook’s social media platform, you can invest in its parent company Meta Platforms. If you still need to open one, these are some of the best-rated brokers and trading platforms. Here’s a step-by-step guide to buying Meta stock using the five-star-rated platform Fidelity.
Evaluate Meta’s Performance
It’s why Meta can still produce ridiculous amounts of free cash flow and helps to explain how the business has such a pristine balance sheet, with a net cash position of $35 billion. Thanks to its strong financial standing, the company can adopt a long-term approach to building out the metaverse, making it the top stock to buy in the space. Moreover, Meta is about to start producing a lot of operating leverage, in large part thanks to its AI investments. It has been spending heavily investing in AI without a whole lot to show for it recently. A lot of factors are starting to come together at the same time for the company to produce meaningful revenue growth without a significant increase in operating expenses.
Cloudflare reported non-GAAP earnings per share that were in line with analysts’ quarterly estimates. Thus, it positions Shopify to link into the metaverse and offers it a footing in the virtual world’s future business goals. As these future ambitions unfold, the company is still doing its best to develop e-commerce solutions for businesses. Unity’s SaaS business model and ecosystem have a proven track record of generating profits. Additionally, it has a strong financial sheet, with total assets of $4.9 billion at the end of the first quarter, including $1.2 billion in cash and equivalents, and total liabilities of $2.6 billion. The app company hopes to empower people to express themselves in new ways while expanding friendships within the metaverse.
An index fund’s goal is to match the returns posted by its benchmark — for S&P 500 ETFs, for example, that benchmark is the S&P 500. There are index funds that track a range of underlying assets, from small-cap stocks, to international stocks, bonds and commodities such as gold. Choosing good stocks for your portfolio is a relatively time-consuming task, and you need to look beyond performance metrics like the ones on this page. Yes, it’s a solidly good sign if a stock is able to outperform during periods of market volatility and the broad market declines like we saw in 2022. But as referenced above, there are a number of other factors to consider. These are the best stocks in the S&P 500 right now, based on one-year performance.
What You Need to Know About the Metaverse
The gap between the two metrics shows how much net return Meta generates on its invested capital. It’s not a surprise that ROIC sharply declined in 2022 as operating income fell from $47.3 billion to $28.8 billion. Invested capital also rose as its net property and equipment balance increased from $57.8 billion to $79 billion, and total assets increased from $166 billion to $185.7 billion. The increase in the weighted average cost of capital seems to reflect the increase in interest rates over the last two years.
As a result, investors and huge IT companies are fighting for a piece of the metaverse pie and the chance to create their own metaverse platform. Being the top producer of such software and apps, shares of this metaverse stock could be quite secure. One of the most critical aspects of the metaverse is that its developers desire a thriving economy within integrated virtual online environments.
This was brought on first by Apple’s own restriction on consumer data sharing across its devices a couple of years ago, followed by the bear market and economic worries. Advertising is often the first expense to get cut when economic storm clouds appear. Generative AI made headlines this year, and Meta Platforms has staked a claim to benefit from these recent advances. While the company has long used AI for a variety of purposes, Meta now has plans to unleash these next-generation algorithms on its digital-advertising business. Specifically, Meta is one of the few companies out there with the resources to develop the large language models necessary to create generative AI models.
The class B stock represents 10 votes per share and is owned by Zuckerberg, management, and directors. This gives Zuckerberg and his management effective control of the company. Haugen joined the company in June 2019 how to become a video game developer and served on the Civic Integrity team, which focused on the platform’s impact on global elections. With the stock’s surge this year, however, investors seem to be banking on a recovery in operating margin and ROIC.
It’s able to invest so heavily in Reality Labs while absorbing massive losses because it also operates its extremely lucrative “family of apps” division. Combined, its Facebook, Instagram, WhatsApp, and Messenger apps had 3.07 billion daily active people in 2023’s second quarter. The excitement vantage fx around that idea has died down, but that doesn’t mean there aren’t businesses still intensely focused on the technology. So, it won’t be surprising to see Meta maintaining an annual earnings growth rate of 30% for the next five years, which is what analysts are expecting from it.