We think that the continued growth across these competitors indicates that digital advertising remains a healthy and competitive market. In addition, there is a wide variety of third-party ad-tech firms that compete in this space, and even retailers such as Walmart WMT and Target TGT are investing in operating their own digital advertising platforms and should also be considered as competitors.

While Meta and Alphabet GOOGL are the market leaders, other online firms such as AMZN, Snap SNAP, and Pinterest PINS are gaining traction. In fact, in our view, the global digital advertising market remains competitive. For example, some platforms are beginning to give more control of personal data and its usage to their users.Īntitrust Risks We don't foresee a forced breakup of Meta based on antitrust issues. In response to public pressure, Meta and other online firms have already begun to take actions in anticipation of further regulatory measures. Marketers will have other platforms to purchase ad inventory from, but given that restrictions on data may reduce returns on targeted advertising, the large audiences that Meta attracts will continue to bring demand for its ad inventories. Plus, we are confident that Meta's large user base and the continuous usage of its apps will attract advertisers. In our view, restrictions on data will not reverse the network effects that underpin Meta's wide Morningstar Economic Moat Rating, and we expect that any future limitations on data access or usage would apply to all firms in this space. The most likely regulatory risks that may affect Meta would be new restrictions on the amount, type, and usage of the data it collects and whether such data can remain private and secure. This data allows ad tech firms and advertisers to target individual users with relevant and likely higher-return-generating ads. Regulatory Risks Potential regulatory and legal changes threaten to limit access to data, including compilation and storage, sharing, and utilization of information concerning online user behavior across sites, apps, and devices. In fact, we think potential regulatory actions could possibly even benefit Meta's valuation by bolstering the barriers to entry in the social-media space. In a downside-case scenario where we lowered our advertising compound annual revenue growth rate to 12.0% from our base case of 21.8%, our valuation falls from $404 to $239 however, depending on the specifics of any potential regulatory changes, the impact could be much lower. While the outcome of potential regulatory actions could have a negative impact on the economic value of advertising on Meta's platform, such regulatory changes would also affect its competitors. This scrutiny is concentrated on the collection and use of data that is gathered across their platforms as well as the market power exercised by these rapidly growing enterprises. Meta and its social-media competitors have been under the spotlight from regulators across the world. The virtual surroundings and environment can be adjusted based on the users or participants' preferences and use case. In this virtual environment, users will be able to interact with any other users anywhere in the world. The metaverse describes an immersive, online world consisting of augmented and virtual reality. Meta Platforms will consist of two business segments: its legacy family of apps, including Facebook, Instagram, WhatsApp, and Messenger, and its new segment Reality Labs, which will drive the firm's long-term metaverse strategy with augmented and virtual reality hardware and software.

Shareholders are also pushing back through stepped-up proxy votes against company management.īut based on Morningstar's bottom-up analysis, the stock is trading at a 16% discount to our fair value estimate, and we continue to think that it's the most attractive social-media stock under our coverage. It is facing regulatory scrutiny, antitrust lawsuits, and criticism about Facebook's use as a platform to spread false information about the U.S. While Facebook may have changed its name, the controversies that have dogged the company continue. There's no shortage of news around Facebook FB for investors to consider these days, including that it has changed its name to Meta Platforms and will start trading under the ticker MVRS on Dec.

Mvrs meta stock price