Did you ever one of those days?
Meta Platforms (META) apparently did on April 3, when thousands of users reported problems with the social-media giant's Facebook, Instagram and WhatsApp platforms, according to Reuters.
This latest incident followed a two-hour outage that Facebook and Instagram suffered last month, affecting thousands worldwide.
Meta has about 3.19 billion daily active users across its app family, which also includes Threads.
In addition to being a serious pain in the neck, social media outages can be expensive in terms of lost advertising dollars.
Studies indicate that 62.3% of the world's population uses social media, and the average daily usage time is 2 hours and 23 minutes.
Any way you slice it, that’s a lot of eyeballs, and the people behind those eyeballs want to buy all kinds of stuff.
Last year, social media ad spending reached $270 billion and it is expected to surpass $300 billion by 2024, according to Statista.
Facebook tops for marketing
Facebook, which has 2.9 billion monthly active users, was picked as the leading social media platform for marketing in 2023, Statista said. About 90% of surveyed marketing experts said they used it for promotional purposes.
Instagram is also a lucrative marketing destination. The platform enables businesses to promote their products and services through various formats, from photos and tags to Stories and Reels.
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Not to harp on the bad news, but on Oct. 4, 2021, Facebook and its Messenger, Instagram, WhatsApp, Mapillary, and Oculus subsidiaries went on a global fritz for six to seven hours.
CEO Mark Zuckerberg posted an apology on Facebook, writing “Sorry for the disruption today — I know how much you rely on our services to stay connected with the people you care about.”
The fact-checking website Snopes did a rough calculation and suggested the outage cost $79 million in lost ad revenue.
Social media advertising is getting competition from TikTok and influencers, but it's still a major source of revenue and it's something that stock market analysts follow.
In February, Meta, a member of the so-called Magnificent 7 tech stocks, posted adjusted fourth-quarter earnings per share of $5.33 on revenue of $40.1 billion.
Analysts had expected adjusted EPS of $4.94 and revenue of $39 billion.
A year earlier, Meta reported earnings of $1.76 a share on revenue of $32.2 billion, meaning that sales grew by 25% year over year, and earnings tripled.
The company also boosted its stock buyback by $50 billion and initiated a quarterly dividend of 50 cents per share for the first time.
In addition, Meta said fourth-quarter advertising revenue was $38.7 billion compared with $31.3 billion a year earlier.
Analyst sees ad revenue growth from AI
During an earnings call with analysts, Susan Li, Meta’s chief financial officer, said the company was building its Advantage+ portfolio to help advertisers leverage artificial intelligence to automate their advertising campaigns.
"Advertisers can choose to automate part of their campaign creation setup process such as who to show their ad to, with Advantage+ audience," she said.
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"Or they can automate their campaign completely using our end-to-end automation tool for driving online sales, Advantage+ shopping, which continues to see strong growth," Li said.
Analysts clearly liked what they were hearing, and several raised their price targets for Meta shares.
Wedbush analyst Scott Devitt said he was “encouraged by impressive results and guidance as the company continues to see healthy engagement trends and improving monetization.”
"Meta remains our top digital advertising pick and we are raising estimates following results," he wrote in a research note.
In February, he reiterated an outperform rating on Meta and boosted the company’s stock price target by $100 to $520 a share.
Advertising revenue was also a concern of Jefferies analysts, who raised the firm's price target on Meta Platforms to $585 from $550 on April 4 while affirming a buy rating on the shares.
Based on an updated market-share analysis, the analysts believe Meta could capture 50% of incremental industry advertising dollars in 2024, which would be its highest ever and well above its 33% in 2023.
Wall Street believes strong performance at Instagram and Facebook will result in Q1, 2024 revenue and earnings of 33.3 billion and $3.95 per share. Meta Platforms is scheduled to report results later this month on April 24.
In 2024, Meta's advertising revenue could grow 20%, above the 9% industry average, as scaling generative artificial intelligence ad tools supplement the company's "already best-in-class" Advantage+ product suite, the analysts told investors in a research note.
Jefferies analysts say Meta's market-share gains will further accelerate in 2024. The firm now estimates that in 2024, Meta's ad business could outgrow Amazon's (AMZN) for the first time since 2015.
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