<div id="readability-page-1"><p><strong>Meta Platforms </strong><span>(META<span> -0.97%</span>)</span> stock has dramatically improved over the last two years. During that time frame, its stock was up more than 400% as it moved on from its misstep into the metaverse and embraced artificial intelligence (AI). This move has fundamentally transformed the stock of Facebook's parent company.</p> <p>Still, amid a massive run that has taken its market cap above $1.5 trillion, investors may have good reason to wonder whether this can continue if Meta's revenue growth slows. Thus, investors should consider whether they want to foster this friendship with Meta, or if now is the time to unfriend the social media stock.</p>  <h2>The state of Meta Platforms</h2> <p>Investors know Meta best for its dominance in the social media landscape. Nearly 3.3 billion people log on to a platform owned by Meta daily. The company has leveraged its sites into a digital advertising juggernaut, second only to Google parent <strong>Alphabet</strong> in ad revenue among publicly traded companies.</p> <p>So successful is Meta in its realm that TikTok is the only other site coming close to the popularity of Facebook, its flagship platform. With the prospect of a ban on TikTok in the U.S., investors have bought into Meta's shares due to the possibility that much of TikTok's lost ad revenue could go to the Facebook parent.</p> <p>Admittedly, TikTok also has a good chance of becoming a source of uncertainty rather than revenue. TikTok parent ByteDance could cave to demands and sell the platform to an American company before the Jan. 19 deadline. Also, the U.S. Supreme Court will hear the court case on the TikTok ban, which could hammer Meta stock if the court sides with TikTok.</p> <p>Fortunately, Meta's move into AI could become a more significant revenue source regardless of its competitive situation with TikTok. While the augmented reality segment Reality Labs was a source of the stock's woes when the company pivoted into the metaverse, its heavy investments into artificial intelligence (AI) have revived this business.</p> <p>Among its tools is an AI chatbot that can accomplish tasks such as answering questions, generating images, and making recommendations. Additionally, its AI-driven ads manager can help create ads and boost the performance of ad campaigns. Such tools could help customers save money while boosting their returns on ad spend.</p> <h2>How its business affects its financials</h2> <p>To accomplish its AI goals, Meta projects that between $38 billion and $40 billion for capital expenditures. Although that sounds like a staggering sum, Meta can likely afford these expenditures. The company generated $156 billion in revenue over the trailing 12 months, a testament to its strength in the ad market.</p> <p>Moreover, it holds about $71 billion in liquidity, and it has generated about $52 billion in free cash flow in the last 12 months. That is more than enough to cover its investments and the $5 billion in annual costs for its dividend. Furthermore, amid massive gains, Meta stock seems to have kept its valuation in check. Its P/E ratio is 28, which is actually <em>below </em>the <strong>S&amp;P 500 </strong>average of 31.</p> <p>However, even with its compelling attributes, investors should remember that Meta stock will not be free of challenges even if the TikTok ban happens. After projecting 21% revenue growth for 2024, analysts believe that could slow to 15% in 2025. Since investors tend to punish stocks when revenue slows, that fear could temper gains going into the new year.</p> <h2>Should investors unfriend Meta Platforms stock?</h2> <p>Considering its social media dominance, strength in the ad market, and growing AI capabilities, investors should remain friends with Meta and consider adding shares.</p> <p>Indeed, the uncertainty about its competitive situation with TikTok and the prospect of slowing revenue growth could weigh on the stock in the near term. Also, considering the rise in the stock price, investors should assume that the market has already priced in most of the company's attributes.</p> <p>Nonetheless, Meta's family of apps should keep users in its ecosystem. Additionally, as its AI-driven reach grows, the company should continue generating massive amounts of free cash flow that will continue enriching investors. That cash and its investment should foster long-term growth in Meta stock.</p>                                                                                             </div>

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Should Investors Unfriend Meta Platforms Stock in 2025?