Why is Meta a good investment? A growth investor replies
As with any investment, capital is at risk.
Meta is already one of the world's biggest companies, and its share price has risen dramatically in recent years. So, can it still be considered a good growth investment?
This is Money replies: Meta is the group behind some of the world's most famous digital names, Facebook, WhatsApp and Instagram. It is also one of the most successful and largest companies in the world.
We spoke to Jon Henry, Investment Specialist, at Monks Investment Trust, which holds Meta as one of its top ten holdings to ask him why it can still be considered a good growth investment.
But first a bit of background. Facebook founder and CEO Mark Zuckerberg changed his company's name to Meta in October 2021 and since then its share price has almost doubled from $323 to $640 (on 16 May 2025), with the business now having a huge $1.6trillion market cap.
Facebook and then Meta's growth has been astonishing over the company's relatively short life - the initial site was only started at Harvard University in 2004 - and long-term holders of its shares will have been richly rewarded.
But with Meta now so big, and so many people and businesses all around the world already using its social media apps, services and advertising, it is reasonable to ask how it can still be a growth investment, with its earnings and shares continuing to rise.
Monks is an investment trust managed by Baillie Gifford, which aims to deliver long-term capital growth for its investors, by applying a patient approach to holding a diversified range of global growth stocks.
Jon Henry, of Monks Investment Trust, replies: Under Mark Zuckerberg's leadership, Meta has proven itself innovative, flexible and willing to invest significantly in growth.
Indeed, Meta has invested billions in its AI capabilities, amid scepticism from investors. In early 2022, Meta's shares traded on a low teen multiple of earnings (a company's total valuation expressed as a multiple of its annual profits).
We added for Monks during this period - but this has proven to be the bedrock of its subsequent success, and its share price has tripled over the past three years.
Meta now offers a market-leading advertising proposition with unparalleled reach across 3.6 billion monthly active users—approaching half of humanity.
It has developed a 'core AI' capability that better targets merchant advertising to users on its platforms. This has driven increasing engagement and higher conversion rates for merchants, boosting Meta's pricing power and profit growth.
Meta's latest results suggest that its growth engine remains in rude health.
It delivered impressive revenue growth of 19 per cent year-on-year, while operating margins have expanded considerably (now 41 per cent, up more than 3 per cent year-on-year, having been 28 per cent in 2022).
So, what would a growth fund manager who decided to hold Meta shares look for in the company to back up their investment decision?
Our investment case centres on strengthening evidence that Meta will remain a critical communication infrastructure in the Western world.
We are looking for Meta to leverage its vast scale and financial firepower to grow its reach and targeting capabilities over time.
This includes growing its nascent Threads platform, which now has around 300 million users and leveraging AI across its advertising estate.
For example, WhatsApp has 3 billion active users but contributes a small proportion of Meta's revenues today. A combination of growing scale, improved engagement and higher revenues per customer should support Meta's growth beyond its circa 20 per cent market share of global digital advertising (the global market, circa $1trn growing at 9 per cent p.a.).
Another leg of Meta's growth story will be its 'generative AI' capabilities. 'Meta AI', an AI agent embedded into its family of apps, could deliver growing utility and revenue potential.
Meta continues to invest aggressively, indicating that it plans to spend $64-$72bn on AI this year alone. These services will allow AI agents to interact with communities, create engaging and personalised adverts, and generate organic content.
While monetisation is not yet on the agenda, these services could become extremely valuable and are not recognised in the valuation of the shares today, which are currently trading on a mid-twenties multiple of earnings.
> Learn more about Monks and long-term investing in a changing world
Important information
This article does not constitute, and is not subject to the protections afforded to, independent research. Baillie Gifford and its staff may have dealt in the investments concerned. The views expressed are not statements of fact and should not be considered as advice or a recommendation to buy, sell or hold a particular investment.
Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA).
Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). The investment trusts managed by Baillie Gifford & Co Limited are listed on the London Stock Exchange and are not authorised or regulated by the FCA.
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