Why Meta Platforms Stock Rallied Today

The Motley Fool
The Motley Fool

What happened

Shares of Facebook parent Meta Platforms (NASDAQ: FB) rose 3.6% on Monday, after media investment company GroupM released an intriguing growth forecast for the digital advertising market.

So what

Global ad spend excluding political ads will surge 22.5% in 2021 to a staggering $766 billion, according to Brian Wieser, GroupM's global president of business intelligence. That's up from his prior estimate of 19.2%.

Looking further ahead, Wieser sees the industry growing 9.7% in 2022. And by 2025, GroupM projects that the global ad market will expand to a cool $1 trillion.

Image source: Getty Images.

"The advertising industry is in a ridiculously healthy state at the present time," Wieser told Adweek . "The 23% growth rate we're calling for in 2021 is possibly one of the strongest rates of growth ever for the industry."

Wieser chalked up the gains to the rise of entrepreneurship and the growth of e-commerce. Many new online businesses are focused on driving their sales growth, even if that means sacrificing near-term profitability, according to Wieser.

Now what

GroupM's projections were even better for the digital segment of the ad market. Wieser expects digital ad spend, excluding U.S. political advertising, to soar 30.5% this year and 13.5% in 2022.

GroupM anticipates that digital advertising will comprise nearly two-thirds of the overall ad industry, up from roughly 60% in 2020. And Wieser believes that Meta, along with fellow industry giants Alphabet and Amazon , could capture as much as 90% of that digital ad spending.

So although Facebook may have recently changed its name to Meta Platforms to reflect its new metaverse-focused ambitions, shareholders can take comfort in the knowledge that its core advertising business remains on solid footing.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Joe Tenebruso has the following options: short January 2024 $4,000 puts on Amazon. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Meta Platforms, Inc. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy .

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