Image source: Getty Images
Here’s why I’m looking closely at the owner of Facebook Goal (NASDAQ: META) for my portfolio right now.
First, the share price of Mark Zuckerberg’s company has risen a staggering 78% so far this year. About him Nasdaq 100only one other company has earned more than that.
Looking back, investors who have held the stock for a decade have enjoyed an excellent six-fold return on their investment. That’s even factoring in a rocky 2022 for the stock price.
Best of all for the owner of Facebook, Instagram and Whatsapp, the February earnings report showed that privacy changes Apple made on their devices have not had the impact many feared.
All of this good news tempts you to buy stocks for the wealth-building potential, especially if you feel the stock can recreate its previous explosive growth. Here are some reasons why I think it might.
excellent growth
Meta has grown its business at an incredible rate. In the past 10 years, the company’s revenue has expanded by double-digit percentages in every year except one.
Even in that sluggish year, 2022, revenue grew 4% in constant currency. Not bad for the worst year in a decade.
The company’s net income has grown to a whopping $23 billion. That’s more than the total revenue of entire countries like Bulgaria, Iceland or Uruguay, and much of that revenue is earmarked for new growth opportunities.
I think this fantastic track record of building and growing profits bodes well for stocks. If the company continues to grow, then my shares should be worth more.
What does the future hold?
So the obvious question has to be: is there room for further growth? After all, with almost 4 billion monthly active users on its products, perhaps Meta is running out of people in the world to start using its products.
The company’s two biggest products, Facebook and Instagram, are already the two highest-grossing social media websites. This could be a sign that the sites might not have much additional monetization potential.
A saturated market and saturated products are big risks. I would not expect huge gains in that situation.
three reasons to be happy
However, I am optimistic that the company has more to expand. For one thing, your investment in VR/metaverse technology could be a catalyst for huge future growth if these virtual worlds take off.
Second, Whatsapp is very popular but not well monetized at the moment. If Meta could make Whatsapp profitable in the same way as Facebook, then I am sure I would get excellent returns on my investment.
Finally, I think there is something special about FAANG shares like Apple, Amazon and, of course, Meta (the F in Meta’s previous name, Facebook, provides the first letter of the acronym FAANG).
The best minds in the world work for these companies. And such incredible talent is one reason, in my opinion, why these big tech firms have enjoyed some of the biggest and fastest gains in stock market history, and why they may continue to do so in the future.
All things considered, I think Meta is in an extremely exciting place right now and could help me build wealth as a stock in my portfolio. Next time I have some cash on hand, I will seriously consider opening a position.
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