Here's Why Meta Platforms Should Trade at a Lower Multiple Than the Rest of the "Magnificent Seven"

Meta Platforms (NASDAQ: META) financial results have been impressive in the first half of the year. Its strong growth has been fueled by robust advertising demand and an engaged user base across its social media apps. The company, which owns Facebook, Instagram, WhatsApp, Messenger, and Threads, is making significant investments in artificial intelligence (AI) and innovative ad formats -- all while revenue and earnings are soaring. No wonder the Street has been buying up the stock.Meta Platforms remains one of the world's largest digital ad sellers -- an advertising-led business that can grow quickly when marketers spend and pull back just as fast when they don't. That mix of strength and fragility, however, is the point here. While Meta's execution in core ads has been impressive lately, two structural realities make its earnings power more volatile than peers in the so-called "Magnificent Seven": exposure to advertising cycles and reliance on distribution largely controlled by Apple and Alphabet. Add in credible competition for user attention, and it's reasonable that Meta's price-to-earnings multiple sits in the 20s while others command richer premiums.Image source: Getty Images.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool