Meta Platforms has faced some challenges in recent times, with a drop in share prices since its peak in 2021, and investors remaining cautious about its future prospects despite a recent recovery. Its advertising business has been struggling to maintain its former success, which has put significant pressure on the company's profitability. However, Meta's family of apps has experienced growth in engagement throughout 2022, which suggests that the company is still relevant. To improve efficiency and profitability, Meta is focusing on cost-cutting measures in 2023.
Nevertheless, there are concerns about Meta's recent investment in the metaverse industry, with the Reality Labs metaverse business showing a slight decline in revenues in 2022. While the potential for the metaverse to generate significant revenue is optimistic, the industry would have to reach mass distribution to achieve such numbers. Furthermore, it may take longer than expected for the metaverse to gain mainstream adoption, resulting in a lower return on investment for Meta.
Overall, there are too many uncertainties for most investors to feel comfortable with Meta's current situation, with the advertising business under pressure and the metaverse venture still burning through cash. However, for investors with a high tolerance for volatility, taking a small position in Meta stock could be an option if they believe in the long-term recovery and growth of the advertising business and the potential for the metaverse business to generate significant revenue in the future.