Meta Platforms

Facebook parent Meta Platforms has encountered its fair share of headwinds recently. The company is dealing with privacy changes to Apple's smartphone operating systems that affected advertisers' ability to reach their target audiences. Meta Platforms still generates the bulk of its revenue from ads, so it's not surprising that this development scared off some investors.

Still, despite recent hiccups, the online advertising industry isn't going anywhere. In fact, it's set to expand in the coming years, and companies like Meta are well-positioned to benefit.

The sheer number of users across Meta's family of websites and apps (including Facebook, Messenger, Instagram, and WhatsApp) is impressive. As of the end of 2021, Meta had 3.59 billion monthly active users across all its apps, representing a 9% year-over-year increase. In 2021, the company brought in $117.9 billion in revenue and $39.4 billion in net income, representing respective year-over-year increases of 37% and 35%. The same year, Meta generated $38.4 billion in free cash flow, 67% higher than in 2020.

Meta Platforms can afford to invest in other opportunities thanks to the cash flow it generates. The company has been pouring money into its metaverse ambitions. These moves could yield serious benefits if, as some have suggested, the metaverse delivers a $1 trillion opportunity in yearly revenue once it is up and running.

Meanwhile, Meta Platforms is still looking for new ways to monetize Instagram. The company announced Instagram subscriptions in January, a feature that allows creators on the platform to set monthly prices for access to their content. If this feature becomes permanent, Meta Platforms will pocket a percentage of creators' subscription revenue, although it isn't yet doing so.

With all these potential growth avenues ahead, not to mention its massive user network, Meta will continue increasing revenue and profit, even if growth rates slow in the short run as a result of competitors' roadblocks. Expect Meta to rebound from its current stock woes and get back to providing market-beating returns in the long run.