Citi analyst Ronald Josey reiterated a Buy rating on Meta Platforms Inc
With the broader online advertising environment strengthening in the fourth quarter, the analyst's Reels tracking suggests fourth-quarter ad load expanding (albeit at a slower pace).
The analyst also noted that newer ad products are attracting greater demand.
Josey's Reels ad load tracking suggests ad loads expanded to 19.1% in the fourth quarter and +20bps quarter-on-quarter. Reels will likely become revenue accretive in the fourth quarter, he noted.
Monetization efficiency through newer ad products and advertiser adoption is ramping.
Meta - parent company of Facebook, WhatsApp and Instagram - remains Josey's top pick across the internet sector for fiscal 2024 as engagement expands.
The Menlo Park, California-based company benefits from a multi-year product roadmap across social, generative artificial intelligence (AI), and ad innovations as margins expand, Josey explained.
A major part of Meta's roadmap includes investing billions in Nvidia AI chips.
Meta reports its fourth-quarter earnings on Feb. 1, and the analyst expects results to be better than expected across both revenue growth and profitability.
The analyst projects fourth-quarter revenue and EPS of $39.45 billion (versus consensus of $39.03 billion) and $4.83 (versus consensus of $4.97).
The Meta Platforms stock gained 170% last year, outperforming broader indexes.
Meta CEO Mark Zuckerberg reportedly took advantage of the uptick in share price. He sold $428 million worth of company stock in the last two months of 2023.
This sale came after two years when the tech mogul had not sold any shares. During this hiatus, Meta's stock price reached its lowest in seven years.
Price Action: META shares traded higher by 1.19% at $386.29 on the last check Tuesday.
