META Focuses on User Safety & Engagement: Ad Revenues to Rise?

Meta Platforms’ META focus on enhancing safety for WhatsApp users and new ways to connect Instagram users is expected to help drive advertising revenues. The company’s focus on integrating AI into its platforms — Facebook, WhatsApp, Instagram, Messenger and Threads — is driving user engagement to boost ad revenues.

AI push is helping Meta Platforms offer content that is interesting and useful, eventually driving engagement. Improvement in content quality, driven by META’s recommendation system, has led to a 5% increase in time spent on Facebook and 6% on Instagram in second-quarter 2025. The launch of AI video editing tools across Meta AI and the new Edits app are noteworthy developments.

Meanwhile, META has introduced features and new anti-scam tools in WhatsApp to combat scammers. In the first half of 2025, WhatsApp proactively detected and banned more than 6.8 million accounts tied to online fraud and scams. Safety features now allow WhatsApp users to review details, leave quietly, or mute notifications when a new contact adds the user to an unknown group. For individual WhatsApp chats, Meta Platforms is testing warnings when users message someone outside their contacts.

Instagram has launched the latest features and tools like repost, interactive map and Friends tab in Reels. The repost option helps Instagram users share reels and posts, which will appear in friends’ feeds and a dedicated repost tab on profiles. The interactive map allows friends to share locations and explore posts, reels and stories tagged to places. The Friends tab in Reels makes it easy to see what content friends are enjoying.

In second-quarter 2025, advertising revenues (98.8% of Family of Apps revenues) increased 21.5% year over year to $46.56 billion and accounted for 98% of second-quarter revenues. At constant currency, revenues increased 22% year over year. The Zacks Consensus Estimate for third-quarter 2025 advertising is pegged at $48.07 billion, indicating more than 20% growth over the figure reported in the year-ago quarter.

META Faces Tough Competition for Advertising Dollars

Meta Platforms is facing tough competition from the likes of Alphabet GOOGL and Amazon AMZN for advertising dollars.

Alphabet’s advertising revenues rose 10.4% year over year to $71.34 billion and accounted for 74% of second-quarter 2025 total revenues. YouTube’s advertising revenues improved 13.1% year over year to $9.77 billion, while Search and other revenues increased 11.7% year over year to $54.19 billion. Alphabet is leveraging AI to boost search dominance with the launch of Gemini 2.5. Search revenues are driven by improving engagement with features like AI Overview, which now has 2 billion users per month and is available in more than 40 languages across 200 countries. 

Amazon’s advertising business reached a milestone in the second quarter of 2025, capturing 9.4% of the company’s total revenues — the highest share ever recorded — and rose 23% year over year to $15.69 billion. Amazon’s ability to harness its vast retail media presence, proprietary shopping data and expanding connected TV (CTV) footprint is a key catalyst. The global rollout of Prime Video ads adds a high-value, premium channel that may lift revenues.

META’s Share Price Performance, Valuation & Estimates

Meta Platforms’ shares have jumped 31% year to date, outperforming the broader Zacks Computer and Technology sector’s return of 13.8% and the Zacks Internet Software industry’s appreciation of 21.4%.

META Stock's Performance

Meta Platforms’ stock is trading at a premium, with a forward 12-month Price/Sales of 8.98X compared with the broader sector’s 6.74X. META has a Value Score of D.

META Valuation

The Zacks Consensus Estimate for 2025 earnings is pegged at $27.98 per share, up 9.8% over the past 30 days, suggesting 17.3% year-over-year growth.

Meta Platforms, Inc. Price and Consensus

 

Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote

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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This article originally published on Zacks Investment Research (zacks.com).

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