In an ongoing series of articles examining the bullish and bearish cases for some well-known stocks, today I look at Meta Platforms (META +0.22%). Lately, the company’s operational performance and stock performance have been going in opposite directions. This indicates investors are torn about Meta and its stock’s potential performance. 

So, which investors are right, the bulls or the bears?

The bull case for Meta Platforms

Meta Platforms is one of the most important digital advertising platforms in the world through its Facebook and Instagram apps. The company’s apps attract billions of people worldwide, with nearly 3.6 billion daily active users as of year-end 2025.

Meta has really transformed its social media platform over the years from a focus on helping people stay connected with friends and family to an entertainment platform. Meanwhile, what the company does better than any other social media company is monetize its large user base. It is just a premier destination for small and medium-sized advertisers to get in front of potential customers.

The other thing that Meta has been able to do just as well as any company is harness the power of artificial intelligence (AI) to drive growth in its core business. Its platform is the ultimate AI flywheel. As advertisers see good returns on their spending on Meta’s sites, they typically reinvest that money into more ads on them.

Meanwhile, by moving from social-graph-based recommendations to AI-based discovery, Meta is using AI to feed its users more of the content they are interested in. At the same time, its Generative AI Recommendation Model (GEM) and Lattice architecture are giving the company a more comprehensive view of how its users engage across its platforms, enabling it to serve more relevant ads to users. This is increasing ad loads and improving conversions, driving strong ad impression growth and higher ad prices. And the success of its ads just fuels the flywheel.

At the same time, Meta is also just beginning to serve ads on its WhatsApp messaging platform. The app is extremely popular outside the U.S., boasting over 3 billion users. It is also slow-cooking its new Threads social media platform, building its user base, and adding new features. This has the potential to be another growth driver in the years ahead.

Meta Platforms

Today’s Change

(0.22%) $1.36

Current Price

$629.75

The bear case for Meta Platforms

Meta is very good at one thing: monetizing its social media apps. However, the company has a history of burning cash like kindling on side projects. CEO Mark Zuckerberg’s metaverse initiative was an absolute disaster.

The company’s Reality Labs segment, home to the metaverse, has lost more than $80 billion since 2020, including $19 billion last year, with nothing much to show for it. The company is now mercifully finally shutting down its virtual reality platform, Horizon’s World, on its VR devices later this year. What makes the pile of losses even worse is that almost no one outside of Mark Zuckerberg actually believed in the project. That’s just a massive waste of shareholders’ money.

Now Meta is pivoting its spending to AI and AI infrastructure. It just released its first foundational large language model (LLM) earlier this month after spending billions of dollars investing in Scale AI and bringing in its founder, Alexandr Wang, to spearhead the project. The new model, Muse Spark, is very good in some areas, but lags in others. The question now is, can the company actually profit from it?

The verdict on Meta

The spending by Zuckerberg on vanity projects over the years is an issue, and his new “personal superintelligence” ambitions could mean more of the same. That said, Meta has a great core business that is the perfect AI flywheel.

I’m willing to put up with the company’s sometimes frivolous spending, given its attractive valuation (a 21.5 times forward P/E) and strong growth opportunities ahead. The stock is a buy in my book.