META Adds New Features to Drive User Engagement: Can it Aid Ad Growth?

Meta Platforms META is benefiting from its ongoing efforts to introduce new features across its Family of Apps, including Facebook, Instagram, WhatsApp, and Threads. This is expected to boost user engagement, driving advertising revenues that contribute the majority of revenues. In the fourth quarter of 2025, Meta Platform’s Advertising revenues increased 24.3% year over year to $58.14 billion and accounted for 97.1% of fourth-quarter revenues.

In the fourth quarter of 2025, Meta reported strong performance across its Family of Apps, with more than 3.58 billion daily active users engaging with its platforms, including more than two billion daily actives on Facebook and WhatsApp, and nearly two billion on Instagram.

Meta introduced several new features across its platforms to enhance user engagement and monetization. On Instagram, Reels watch time increased by more than 30% year over year due to ranking optimizations and improved content recommendations. Facebook saw double-digit growth in video time, with a 7% lift in views of organic feed and video posts driven by ranking improvements. Threads experienced a 20% increase in time spent due to recommendation enhancements. Meta also launched AI dubbing for videos in nine languages, driving incremental time spent on Instagram.

WhatsApp is an extremely prized possession of Meta Platforms. In the fourth quarter of 2025, WhatsApp expanded its paid messaging capabilities, crossed a $2 billion annual run rate, and introduced business AI tools that facilitate more than one million weekly conversations between users and businesses. The company recently introduced new WhatsApp features, including smarter storage management, cross-platform chat transfer, dual accounts on iOS, AI-powered photo editing, sticker suggestions, and enhanced AI writing assistance to improve user experience.

The new features are expected to boost META’s share in the digital advertising market. Meta Platforms expects total revenues between $53.5 billion and $56.5 billion for the first quarter of 2026. The Zacks Consensus Estimate for revenues is currently pegged at $55.34 billion, suggesting 30.78% growth from the year-ago reported figure.

META Faces Stiff Competition

Meta Platform is facing stiff competition from competitors like Snap SNAP and Reddit RDDT. Both Snap and Reddit are expanding into advertising to compete in the rapidly growing digital ad market.

Snap is benefiting from strong revenue growth driven by improved advertising demand and the expansion of direct revenue streams. In the fourth quarter of 2025, total active advertisers jumped 28% year over year, driven in part by simplified onboarding, improved campaign workflows and increased performance.

Reddit is benefiting from strong momentum in its advertising business, which has emerged as a key driver of growth for the company. Its strong focus on enhancing user-friendly features and expanding advertiser tools such as DPA, Reddit Pixel and CAPI is driving significant growth in user engagement and ad revenues. In the fourth quarter of 2025, Advertising revenues surged 75% year over year to $690 million.

META’s Share Price Performance, Valuation and Estimates

META’s shares have plunged 25.2% in the trailing six-month period, underperforming the broader Zacks Computer & Technology sector’s decline of 7.9%.

META Stock Performance

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META shares are overvalued, with a forward 12-month Price/Sales of 5.21X compared with the Internet - Software’s 3.42X. RDDT has a Value Score of C.

META Valuation

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The Zacks Consensus Estimate for 2026 earnings is pegged at $29.75 per share, unchanged over the past 30 days. This suggests 26.65% 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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