Facebook, which in 2021 changed its name to Meta Platforms to highlight its growing portfolio of social networks, is now among the ten most valuable companies in the world, measured by market capitalization.
With over 3 billion people active daily across its platforms, Meta continues to seek ways to grow user engagement, most recently launching the Threads application to attract some of Twitter’s 238 million daily users.
In light of the fact that so many platforms are operated by the company, one cannot invest solely in Facebook or Instagram. Instead, the way to gain exposure is to purchase the parent company stock, namely Meta Platforms.
In this article, we’ll share tips for choosing a stock broker to buy Meta stock, provide a step-by-step guide to help you make your first purchase, highlight exchange-traded funds (ETFs) with high exposure to Meta stock, delve deeper into the reporting structure of Meta, and more!
How to buy Meta stock (Step-by-step guide)
1. Choose a good stock broker
Since Meta is among the ten biggest companies in the world, you can choose from a myriad of brokers to help you make the purchase. That said, consider the terms offered by each broker and ensure the broker you pick works with residents of your country. Below we highlight four brokers which offer Meta stock:
|Broker||Stock commission, US||Minimum Deposit||Available countries|
|eToro||$0||$10 (varies for different countries)||Worldwide – exceptions apply.|
|Interactive Brokers||Free for US investors. Up to $0.0035 per share with a minimum of $0.35 for international investors||$0||Worldwide – exceptions apply.|
|Trading 212||€/£0||€/£10||Worldwide. Not available in the US and other countries.|
|Saxo Bank||$0.02 per share with a minimum of $10.00||$0 to $10,000 (varies between countries)||Worldwide. Not available in the US and other countries.|
2. Open and fund your account
Once you have weighed the pros and cons of each broker, you are all set to open an account. The process usually takes a few days as the broker verifies your identity. After the process is finalised, you must deposit money into your account.
3. Place a “Buy Order”
If you have found an online broker that suits your needs, managed to open an investment account, and made the initial deposit, you are all set to buy your stock. All you have to do is find the share within your chosen broker and place a buy order. For this example, we will use eToro:
a) Search for Meta Platforms stock ( ticker “META”):
b) Click “Trade”:
c) Choose the order details. Now, it’s time to choose how to invest:
- Amount: You choose the amount you want to invest in Meta instead of the number of shares. In this way, your investments may be fully or partially in fractional shares.
- Units: As opposed to “Amount,” here you define the number of shares you want to purchase (note: you can buy using either “Amount” or “Units,” up to you!)
- Leverage: You can choose the level of leverage. “X1” means no leverage (if it were “X2” or above, you would not be trading real stocks but CFDs on Meta stock instead). That’s why you see “you are buying the underlying asset.”
- Stop Loss: Define the maximum you are willing to lose before closing your position automatically;
- Take profit: Define the profit amount that makes you close your position automatically (if reached).
Only the “Amount” (or “Units”) and “Leverage” are mandatory fields.
d) Place the order: Finally, click “Open Trade,” and a new window will show up where it says “order filled,” your exposure, and lets you share your trade with other people.
ETFs – an alternative way to gain exposure
ETFs allow you to gain exposure to a dozen or even hundreds of companies with a single investment. ETFs can be a good option if you:
- Want to complement your Meta position with similar companies;
- Want to limit your portfolio volatility (ETFs invest in many companies operating in different lines of business, limiting your exposure to idiosyncratic risks);
- Are interested in following a specific theme in your investments (social media stocks, communication services shares, etc.);
Some ETFs you may want to consider are:
- Communication Services Select Sector SPDR Fund (ticker XLC) tracks 23 communication services companies, but is heavily tilted to the top two names – Meta Platforms at 24.54% and Alphabet at 21.89%. The ETF distributes dividends, and the expense ratio stands at 0.1%.
- Global X Social Media ETF (ticker SOCL) tracks 44 social media companies, with Meta Platforms the biggest holding at 12.86%, followed by Naver at 9.35% and Tencent at 8.78%. The ETF distributes dividends, and the expense ratio stands at 0.65%.
Meta’s Financials and Performance
Once you have purchased Meta shares, it is a good idea to keep track of how the company and its competitors are doing. In doing so, you will get greater insight into whether to add to your position, hold it, or sell it to pursue better opportunities elsewhere.
Apart from the investor relation section (available here), there are specialised platforms to help you understand how Meta is doing from a financial perspective. One platform you can use is Koyfin – you can access Company overviews, Key statistics, Financials, Transcripts, and more! Get a 20% discount on Koyfin.
For example, Koyfin allows you to get a quick handle on how the company’s revenues and margins (as measured by gross profit) are doing:
While such platforms cannot substitute your research 100% of the time, they can be a very useful tool in the research process, saving you time and providing new investment ideas.
The go-to place to find up-to-date information on the company is its investor relations section, available here. Below we will provide a quick overview of the company’s operations.
Meta reports results in two main segments:
- Family of Apps – 98.8% of revenue
- Reality Labs – 1.2% of revenue
Family of Apps is the company’s bread and butter. 99% of the segment’s revenues come from advertising across Facebook, Instagram, Messenger, third-party applications and websites. This is the company’s only profitable business line, accounting for all positive operating income.
Reality Labs reflects Meta’s efforts to develop the metaverse and generate revenue from sales of consumer hardware products, software and content. Currently, the segment is loss-making and represents a huge drag on performance, reducing operating income by ~36% in Q1 2023!
With the segment overview behind us, let’s dive deeper into the other performance indicators reported by Meta, which will help us gain greater insight into the health of the company’s operations. Key metrics to watch include:
- Family daily/monthly active people
- Ad impressions and price per ad
- Family average revenue per person
- Capital expenditures and free cash flow
Family daily/monthly active people show how many users have used Meta’s platforms in a given day/month. Over the past two years, about 79% of monthly active users (3.81 billion people in Q1 2023) have been active on a given day (3.02 billion people). Thus these two indicators give a raw view of the potential ad viewership base.
Ad impressions and price per ad show the dynamics of viewed ads and money received per ad. In Q1 2023, ad impressions grew 26% Y/Y while the average price per ad was down 17% Y/Y. We can conclude that this was positive for Meta, with the ads’ growth surpassing the drop in ad pricing, resulting in a net gain in advertising revenue (+4% Y/Y).
The family average revenue per person is an indicator that combines the two performances as mentioned above metrics. It considers whether users are growing, in which geographies in which the growth is occurring (users in high-income countries bring in more ad revenue per person), whether they see more or fewer ads, and whether these ads are cheaper or more expensive. In Q1 2023, the average revenue per person was $7.59 per person, down 1.7% Y/Y.
Capital expenditures and free cash flow are clear indicators which show whether the company is investing in the future (most prominently in Reality Labs) or is allocating cash for share repurchases. In Q1 2023, capex grew 28% Y/Y while free cash flow was down 19% Y/Y.