Talk about a repeat performance. Meta Platforms shares kept the gains coming this year — hot off the heels of 2023, which everyone on Wall Street has come to refer to as the “year of efficiency.” A big question mark in 2025 is politics. Year-to-date performance: up 70% Forward price-to-earnings multiple: 24 versus a five-year average of 21.2 Our rating: Hold-equivalent 2 Our price target: $650 a share ’24 look back The set-up for 2024 was all about the medicine Meta executives took in the prior year when they committed to reducing layers of management to operate with more agility and cutting costs to enhance profitability. It paid off — with not only a 156% increase in operating margin to close out 2023 (the fourth quarter of last year was reported on Feb. 1), but also a greater than 20 percentage points increase in operating margin. Meta also declared its first-ever dividend — a signal to investors of CEO Mark Zuckerberg’s confidence in achieving profitable growth while keeping a focus on cash generation. The stock did not go straight up — it never does — as investors took issue with Meta’s fiscal 2024 second-quarter revenue guidance and an upward revision to full-year capital expenditures. Both concerns were revealed alongside first-quarter earnings after the closing bell on April 24. The next day Meta shares lost 10.5% Nonetheless, as we correctly — hindsight is always 20/20 of course — noted in our analysis of that Q1 report, the pullback was a buying opportunity. As the year progressed, shares quickly regained their footing and continued their ascent with the Street starting to realize that the vast amount of user data Meta has gathered over the years puts it in a prime position to be a real competitor in generative artificial intelligence. Meta leverages AI to serve up better contextual content and advertising. New AI creation tools for companies and organizations allow them to make their own ads. ’25 look ahead We’re confident that management will keep to its mantra of efficiency, but we also expect the team to keep its foot on the AI investment gas pedal and keep pushing forward with Reality Labs, the unit that houses metaverse endeavors and virtual reality headsets. While losses in Reality Labs are expected to continue for the foreseeable future, we think the Street will be forgiving so long as the red ink is kept in check and profitability and cash flow remain top priorities. After all, without upfront investments in big swings, we wouldn’t get products like Meta’s Ray-Ban connected glasses, which is largely immaterial in terms of top-line contribution but do show promise, especially after Zuckerberg’s preview of the Orion augmented reality prototype. As the company brings more tools to its ad marketplace for sellers and finds new ways to engage with users, we’ll be looking for the average revenue per user (ARPU) to increase. To achieve that, we’ll want to see improved monetization of WhatsApp and Messenger as well as more user growth over at the newest addition to the Family of Apps ecosystem, Threads, which is Meta’s answer to X, formerly Twitter. Improved capabilities for the company’s large language model, Llama, will be the other big focus — helping to strengthen the company’s businesses and opening up new revenue opportunities over time for consumers and business customers. Regulation is always a risk when it comes to social media companies, especially one with as much reach as Meta. It’s not clear exactly where President-elect Donald Trump stands on Big Tech these days. But we do know that in the past he’s criticized Meta and other tech firms for having a bias against conservative voices. Zuckerberg and other tech CEOs have been cozying up to Trump since the election. Meanwhile, a challenge to the TikTok divestment law will be heard by the Supreme Court on Jan. 10 — nine days before the deadline for Chinese company ByteDance to sell TikTok or face a U.S. ban and 10 days before Trump’s inauguration. Banning TikTok in the U.S. would be a boon to Meta’s short-form video offering Reels. Additionally, while we do think management is serious when it comes to maintaining cost discipline and reduced management complexity, investments in AI and other Reality Labs initiatives are risks. Nobody on Wall Street wants to see management take its eyes off the profitability ball. (Jim Cramer’s Charitable Trust is long META. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. 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