There are many good reasons to invest in Meta Platforms (NASDAQ: META). We can, for example, point to the fact that the company is posting strong financial results as it seeks to capitalize on the artificial intelligence (AI) trend. Among its many attractive attributes, however, there is one that I find particularly compelling as a shareholder, and that leads me to believe I will remain one for the long term.
Meta Platforms ended the third quarter with 3.54 billion daily active users across its websites and mobile apps, an 8% year-over-year increase. The world’s population is about 8.3 billion people. If we remove all those who are too young to have an Instagram account, it may well be the case that something like half of eligible adults (or young adults) worldwide visit at least one of Meta’s websites and apps every single day. That user base is a veritable goldmine.
And the best part: Most of them are unlikely to go anywhere anytime soon, given the company’s strong network effects. Consider why people open Instagram accounts. It could be to keep up with friends and family, to become an influencer, or to promote products for their businesses, among other reasons. For each of these uses, the platform becomes even more valuable as more people join in, and for those who are already in those networks, it makes little sense to leave.
Meta Platforms’ ecosystem makes it an incredible target for advertisers. It also allows it to launch new monetization opportunities. Less than three years ago, Meta Platforms launched its X competitor, Threads — it already has 150 million daily active users. According to management, it’s on track to become the leader in its category.
Facebook Marketplace is another opportunity that fits naturally within the company’s strategy. Anyone else starting an online platform to connect buyers and sellers would have to work hard to attract an audience. For Meta Platforms, it wasn’t difficult since it already has a large one. So long as Meta Platforms’ vast ecosystem stays in place, the tech leader should find many more monetization schemes, even as advertising remains the most important.
Meta Platforms’ work in AI is undoubtedly strengthening the business. For instance, AI-powered algorithms are helping it increase engagement while enhancing the return on investment marketers get from ads on its platforms. However, none of that would matter if not for the company’s existing user base. Meta still has ample growth potential over the long run, and much of the fuel for that will be its vast ecosystem. That’s why I am staying put.
