In a year where technology giants are setting records, Meta Platforms (formerly Facebook) stands out as a standout performer. With its shares surging by nearly 150% year to date, it outpaces even the tech titan Amazon. A substantial increase in active users across Meta’s social media platforms, coupled with growing advertiser expenditure, has propelled the company’s profitability to new heights. However, what’s next for the tech behemoth may surprise some. In a recent Q3 earnings call, CEO Mark Zuckerberg unveiled his vision for Meta’s next major business endeavor, and it’s not the much-hyped metaverse. Instead, Zuckerberg’s excitement centers around “business messaging.”
The Shift Towards Business Messaging
Mark Zuckerberg’s emphasis on business messaging represents a strategic pivot for Meta. This focus entails businesses employing Meta’s technology to facilitate electronic communication with customers, partners, and stakeholders. Zuckerberg recognizes the pivotal role of artificial intelligence (AI) in driving this business messaging initiative. AI, he contends, will help lower the costs associated with business messaging and expand the sphere of commerce within messaging platforms to larger economies across the globe.
Zuckerberg made it clear that advancing business AI will be a top priority for Meta in the coming years, stating, “[M]aking business AIs work for more businesses is going to be an important focus for us into 2024.” He emphasized the company’s commitment to perfecting the experience, indicating that the integration of AI into business messaging is poised to play a significant role in the future of this venture.
While Zuckerberg refrained from making revenue predictions, he anticipates substantial growth in Meta’s business messaging sector. The potential to alter the dynamics of economic interaction through the use of AI is particularly evident in regions where labor costs are comparatively low, leading to a significant volume of commerce conducted via text-based exchanges.
Leveraging Existing Assets
It’s important to note that Meta is not embarking on this venture from scratch. The company’s acquisition of WhatsApp in 2014 for $19 billion has played a crucial role in this shift. WhatsApp, widely used for personal messaging, has increasingly become a pivotal platform for business messaging. In the third quarter of 2023, Meta generated $293 million in revenue from sources other than advertising, a substantial 53% YoY increase. CFO Susan Li attributed this remarkable growth to the robust revenue derived from the WhatsApp Business Platform.
Mark Zuckerberg noted that in certain countries with lower labor costs, business messaging via text is commonplace. By integrating AI into this process, Meta aims to make it economically viable for businesses to interact with their customers and prospects more cost-effectively.
Meta’s Other Growth Initiatives
AI isn’t just pivotal for Meta’s business messaging; it plays a significant role in various other aspects of the company’s growth strategy. Meta recently unveiled its Meta AI virtual assistant and the AI Studio platform, which have improved content recommendations on Facebook and Instagram, resulting in increased user engagement. The company is also employing AI to aid advertisers in managing shopping campaigns, highlighting the company’s focus on AI as a significant investment area in 2024.
Despite this strategic shift towards business messaging, Meta remains committed to its metaverse vision. This ambition includes the launch of Quest 3, its most powerful virtual reality headset yet, and the introduction of the next generation of Ray-Ban Meta smart glasses. Meta has expanded its Horizon metaverse to include new worlds and is conducting mobile device testing to broaden the metaverse’s accessibility.
In conclusion, Meta Platforms’ remarkable stock performance in 2023 has not diminished its investment appeal. With a low price-to-earnings-to-growth (PEG) ratio of 0.68, the company’s stock is still considered attractively valued. Should Meta execute well on its growth strategies, including the pivotal business messaging focus, it has the potential to generate substantial returns for investors in the years to come.
