What happened
Shares of Meta Platforms (NASDAQ:FB) jumped 2.2% in 2 p.m. ET trading Wednesday after the company — best known for its Facebook social networking site — announced plans to better monetize one of its other social media properties:
Instagram.
Image source: Getty Images.
So what
As CEO Mark Zuckerberg announced on Facebook today, Meta Platforms is testing out a new “subscriptions on Instagram” service that will permit popular creators on the site to profit from their hundreds of thousands of followers by selling “access to exclusive Lives and Stories.”
Commenting on the news, Variety magazine noted that Instagram’s new service will give such Insta-famous personalities as actor @jackjerry, athlete @sedona, and “digital creator” @lonnieiiv a new way ” to make money” on Instagram.
More importantly for investors, selling subscriptions on Instagram will give Meta yet another revenue stream as it takes a cut of these folks’ subscription earnings.
Now what
Not coincidentally, creating a new path to growth for Meta Platforms could be just the thing to turn Meta stock into a bona fide bargain stock. At 24 times trailing earnings, and with a projected 21% long-term earnings growth rate, Meta stock lies just outside of value territory today. Add a percent or two of extra growth from subscriptions, however, and the case for investing in Meta Platforms becomes easy to make at a price/earnings-to-growth (PEG) ratio of 1.0.
No wonder shareholders are excited.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Read More: Why Meta Platforms Stock Popped Today