META

Overview

Meta Platforms, Inc., is an American multinational technology conglomerate holding company based in Menlo Park, California. It is the parent organization of Facebook, Instagram, and WhatsApp, among other subsidiaries. Mark Zuckerberg, the CEO of the company, started the company originally named Facebook in 2004. He founded Facebook with Eduardo Saverin, Dustin Moskovitz, and Chris Hughes, all of whom were students at Harvard University. One of the main issues users experienced was privacy. The issue first arose in 2006 when it introduced News Feed. This consisted of every change that a user’s friend had made to their pages. Privacy is still a major issue that many users still experience to this day.

Business Lines

Facebook's revenue mainly comes from 2 sources: Advertising revenue, and payments and fees revenue.

Revenue Breakdown($millions)

Year201520162017201820192020Advertizing17,07926,88539,94255,01369,65584,169Payments and fees8497537118251,0421,796

As the years have passed, both business line’s revenues have increased significantly. Revenue for Advertising is increasing exponentially. Payments and fees have not been growing as fast, but still have doubled in the last 5 years.

Net Profit($millions)

Year201520162017201820192020Net profits3,68810,21715,93422,12218,48529,146

Facebook's Net income has also been increasing fast and significantly. However, in 2019, there was a decrease in the Net profits. Investor confidence in Facebook weakened amid continued political pressure and a rare lengthy outage of the company's apps.

Advertising and others : Facebook makes money predominantly by showing ads from advertisers within its Facebook and Instagram apps. Advertising represented 98% of Facebook's $86bn revenue in 2020. The remaining 2% of revenue came mainly from selling Oculus and Portal devices and also payment fees from developers. The Facebook business model is based on offering its tools and services mostly for free to billions of users and then making money by allowing businesses to show Facebook’s users advertising. Advertisers pay the price to Facebook that is determined in an auction, based on demand and supply.

Summary: I would invest in Meta for a few reasons, but there are some negatives to the company. The most important reason I would invest in Meta is their revenues. Their revenues are increasing at a fast and significant rate. One of the main issues however is that they heavily rely on their advertisement line. About 98% of their revenues come from that line. If they are making all of their money from one source, that means if it ever declines in the future, they won't have another way to make Money.