Meta Platforms

Investment Thesis

Meta’s advertising platform continues to benefit from AI-driven targeting improvements, and Reality Labs losses are finally showing signs of structural narrowing. We maintain a Buy rating with a price target of $660.

What Changed

The key incremental positive is the acceleration in Llama-driven cost reductions in the core ad-tech stack. By using in-house models to optimize ad delivery, Meta has improved returns on ad spend for advertisers while simultaneously compressing its own serving costs. This is a genuine operating leverage story.

Threads is also emerging as a meaningful engagement driver. Daily active users crossed 175 million — ahead of internal targets — and monetization has not yet begun. When Threads ads roll out, they flow directly to the bottom line with minimal incremental cost.

Reality Labs

The losses are narrowing. Not because hardware sales are booming, but because management has rationalized the cost structure and focused investment on a smaller set of high-priority bets. The Quest headset is the clear platform winner in consumer VR; enterprise applications are building genuine recurring revenue.

Risks

Regulatory risk is the most significant overhang. Both the EU’s Digital Markets Act and ongoing FTC proceedings could constrain how Meta operates its platforms and shares data across its properties.

Teen mental health scrutiny creates legislative risk in the US that could result in operational restrictions on Instagram and Facebook Marketplace.