Meta Platforms (META) has quietly added a new reason for investors to pay attention. Just a few days ago, the company launched Forum, a standalone app for Facebook Groups that looks a lot like Reddit (RDDT), while Meta’s app ecosystem still reaches 3.56 billion daily active users.
Meanwhile, stocks have been choppy. META is down more than 7% so far this year, underperforming the broader market index as concerns persist over AI spending and legal risk.
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Meta is giving community apps another chance
Forum is a small product launch on paper, but it fits into a larger strategy. Meta describes the Forum as a “space dedicated to deeper discussions, real answers, and the communities you care about” with feeds built around group conversations and an AI-powered “Ask a Question” tab. It’s also not Meta’s first attempt at a standalone Groups product, which makes the company’s willingness to revisit the idea notable. If the Forum gains traction, it could create another layer of constant interaction and ad inventory; If not, it becomes another experiment in a long line of Meta side bets.
AI spending continues to pressure stocks
The biggest stock story, however, has been Meta’s capex spree. In late April, the company raised its 2026 capital spending outlook to between $125 billion and $145 billion, up from $115 billion and $135 billion, and shares fell more than 6% in extended trading as investors absorbed the scale of the AI bill.
Meta also said it expects full-year expenses of between $162 billion and $169 billion and warned that legal and regulatory issues in the United States and Europe could materially affect results. The market message has been clear: strong growth is no longer enough on its own if the benefits of AI still seem distant.
In terms of valuation, Meta isn’t cheap in absolute terms, but it’s also not priced like a runaway AI darling. The stock trades at about 22.2 times earnings and its price-to-sales ratio is around 7.2.
At the same time, Meta continues to deliver rapid growth, so the multiple is based more on confidence in future earnings than current revenue alone. That’s why stocks can look expensive in sales and reasonable in earnings at the same time.
Meta’s last quarter was strong
Last quarter was strong enough to make that tension harder to ignore. Meta said first-quarter revenue rose 33% year-over-year to $56.31 billion, while advertising revenue also hit $55.02 billion.
Diluted earnings per share jumped to $10.44 from $6.43 a year earlier, although that included a tax benefit of $8.03 billion. Free cash flow was $12.39 billion, operating cash flow was $32.23 billion, and Meta ended the quarter with $81.18 billion in cash, cash equivalents and marketable securities. Management also forecast second-quarter revenue of $58 billion to $61 billion, with full-year expenses still expected between $162 billion and $169 billion.
The core business continues to do the heavy lifting. The app family’s revenue was $55.91 billion, while Reality Labs generated just $402 million and posted an operating loss of $4.03 billion. Ad impressions were up 19% and the average price per ad was up 12%, a useful reminder that Meta is still proving that it can increase both volume and prices at the same time. That’s the kind of operating context that can eventually take a stock out of the penalty box, even if the market isn’t ready to reward it yet.
What Wall Street thinks about Meta Stock
Even after a tough year for the stock, most analysts are pounding the table. The consensus rating remains a “Strong Buy”, with an average 12-month price target of around $823, implying a 35% upside from current levels.
Separately, BofA analyst Justin Post recently raised his target to $835 and maintained a “Buy” rating, pointing to a huge runway for AI-powered advertising tools.
Furthermore, Mizuho’s Lloyd Walmsley, although cutting his target slightly to $835, remains firmly optimistic and predicts that new consumer AI products will unlock new monetization opportunities.
Not everyone is brave. Jefferies recently lowered its price target to $825. Wells Fargo’s Ken Gawrelski lowered his target to $765, recognizing that the magnitude of the investment budget is a risk that cannot be ignored.
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On the date of publication, Nauman Khan had no (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
