Meta Platforms Adds Ads in WhatsApp: Is it the Next Revenue Pillar?

Meta Platforms META is adding channel subscriptions, promoted channels and ads in Status in the WhatsApp updates tab, which is now used by 1.5 billion people globally. META plans to maintain user privacy as personal messages, calls, and statuses remain end-to-end encrypted. The company will use limited information like country, city, language, channels followed and interaction with ads.
The social-networking giant generated 97.8% of total revenues in the first quarter of 2025. Meta Platforms' focus on improving advertisers' return on ad spending has been a key catalyst. Its proprietary machine learning system, Andromeda, for retrieval in ad recommendation is powered by NVIDIA. AI is helping META become better at targeting and finding the right audience for advertisers. Availability of ads in WhatsApp Status is expected to boost META's top-line growth.
The launch of the new Generative Ads Recommendation model for ads ranking, which is being used in Facebook Reels, has increased conversion rates by 5%. Meta Platforms also saw 30% more advertisers using AI creative tools. Improvements in META's recommendation system have led to a 7% increase in time spent on Facebook, a 6% increase on Instagram, and a 35% increase on Threads over the past six months.
META's growing focus on social commerce through Facebook, Instagram and WhatsApp is noteworthy. In first-quarter 2025, WhatsApp Business Platform, as well as Meta Verified subscriptions, contributed to deliver 34% year-over-year growth in Family of Apps other revenues, reaching $510 million. Per our model, META's 2025 revenues are expected to grow 11.8% year over year to $179.67 billion.
META Faces Stiff Competition for Ad Dollars
Meta Platforms is facing stiff competition from Alphabet GOOGL and Amazon AMZN. Meta Platforms, Alphabet and Amazon are expected to absorb roughly 50% of the projected global ad spending by 2028.
Alphabet's focus on leveraging AI to drive growth is a key catalyst. AI is infused heavily across its offerings, including Search, Google Cloud and Pixel. Alphabet has been taking up initiatives to improve its market share in Search through AI innovations. Alphabet surpassed 270 million paid subscriptions with YouTube and Google One as key drivers.
Meanwhile, Amazon benefits from strengthening its AWS services portfolio. Ultrafast delivery services and an expanding content portfolio are driving Prime growth. The robust advertising business is contributing well.
META's Share Price Performance, Valuation and Estimates
Meta Platforms shares have appreciated 19.9% year to date (YTD), underperforming the broader Zacks Computer & Technology sector's return of 1.1% and the Zacks Internet Software industry's rise of 10.6%.
META's Performance
Meta Platforms stock is trading at a premium, with a forward 12-month Price/Sales of 8.98X compared with the industry's 5.57X. META has a Value Score of D.
META Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for second-quarter 2025 earnings is pegged at $5.75 per share, up 3% over the past 60 days, indicating 11.43% year-over-year growth.
The consensus mark for 2025 earnings is pegged at $25.14 per share, up by 3.2% over the past 30 days, suggesting 5.36% year-over-year growth.
Meta Platforms currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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