Meta Platforms‘ stock has been on a remarkable upswing, surging by approximately 180% in the past year, hovering close to its all-time peak. Eager investors flocked back to the social media behemoth as its advertising division rebounded, buoyed by a $50 billion extension in share repurchases and the introduction of dividends.
As a result of this rally, Meta’s market capitalization crossed the trillion-dollar threshold in January after a two-year hiatus, currently standing at $1.2 trillion. Despite this achievement, Meta still lags behind Apple, whose superior user-privacy features on the iOS mobile operating system have curbed Meta’s ad revenue growth for the past three years.
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Yet, with Meta reinvigorated and firing on all cylinders once more, the question arises: could it potentially surpass Apple, currently valued at $2.8 trillion, by the year 2030?
Predicting Meta’s Potential Value by 2030
In 2022, Meta faced headwinds from intense competition, macroeconomic challenges in the advertising sector, and the repercussions of Apple’s privacy enhancements. The Reality Labs wing, which encompasses Meta’s metaverse initiatives and AR/VR gadgets, continued to hemorrhage billions in cash every quarter. Through this tumultuous period, Meta saw a 1% dip in revenue and a 38% decline in earnings per share (EPS).
Fast forward to 2023, Meta orchestrated a remarkable turnaround with a 16% revenue surge and a dazzling 73% leap in EPS, driven by a resurgence in its advertising arm. Meta’s strategic responses to its competitors included leveraging AI algorithms for increased first-party data collection, expanding its Reels platform, and boosting ad impressions to offset declining prices. Notably, a significant revenue chunk came from Chinese advertisers, contributing 5 percentage points to its overall revenue growth.
Analysts foresee Meta’s revenue and earnings growing at an annual compound rate of 14% and 22%, respectively, from 2023 to 2026. At a forward earnings multiple of 24, Meta’s stock is deemed reasonably valued in relation to these projections.
If Meta maintains this trajectory, achieving a 15% annual growth rate from 2026 to 2030, its EPS could soar to $46.70. Holding a similar forward multiple, Meta’s stock might hit $1,120 by early 2030, catapulting its market capitalization close to $2.8 trillion matching Apple’s current value.
The Prospects of Apple by 2030
Apple underwent a deceleration phase over the last three years. In fiscal 2022, revenue and EPS rose a modest 8% and 9%, respectively, with the conclusion of the iPhone 12’s strong sales cycle. Fiscal 2023 witnessed a 3% revenue decline and a near stagnation in earnings as the 5G upgrade hype faded and Mac sales dwindled post-pandemic. External factors like China’s economic slowdown and unfavorable currency conditions compounded Apple’s challenges.
Analysts anticipate a 4% revenue growth and 8% earnings growth compound annual rates for Apple from fiscal 2023 to 2026. Despite stable growth projections, Apple’s forward earnings ratio of 28 portrays a premium valuation.
If Apple’s growth maintains at an 8% clip from fiscal 2026 to 2030, its EPS could reach $10.50. At a consistent valuation multiple, Apple’s stock price would hover around $294, translating to a market capitalization of $4.5 trillion. A moderation to a multiple of 20, aligned with other mature tech firms, would peg Apple’s worth at $3.2 trillion with a stock price of $210.
Meta’s Sharper Trajectory Compared to Apple
Despite these projections, Meta is unlikely to surpass Apple’s valuation by 2030. However, Meta possesses more upside potential than its counterpart. Achieving Apple’s current market cap within the decade would necessitate Meta’s stock more than doubling.
Conversely, Apple might face challenges in replicating such gains with single-digit earnings growth at premium valuations. The outlook could shift if game-changing products like the Vision Pro emerge, enabling diversification from iPhone dependency, albeit requiring substantial effort.
Stay Informed, Stay Wary
Investors considering Meta Platforms should exercise caution. Before making a move, ponder over the insights presented:
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