Dan Ives of Wedbush Securities said Meta's stock price does not currently reflect the revenue opportunities from its upcoming subscription products [1].
This assessment comes as the company explores shifting its business model beyond traditional advertising. If users adopt paid subscriptions for software and services, it could create a more predictable, and diversified stream of income for the social media giant.
Speaking during CNBC's "Closing Bell" program, Ives said whether users are willing to pay subscription fees for Meta's ecosystem [1]. He said that the potential for software earnings remains a significant factor that the market has yet to fully price into the stock [1].
Meta has historically relied on an ad-supported model, but the introduction of paid tiers or software services represents a pivot in strategy. The analyst's comments suggest that the company's internal development of these products may be further along or more promising than investors currently believe [1].
While the company has not detailed the exact pricing or structure of these upcoming offerings, the focus on software earnings indicates a push toward high-margin recurring revenue. Such a shift would reduce the company's vulnerability to fluctuations in the digital advertising market [1].
Ives' analysis highlights a gap between the company's current valuation and its future earning capacity. The transition to a subscription-based model is a trend seen across several big tech firms seeking to stabilize growth [1].
“Meta's stock is not reflecting the revenue opportunities”
If Meta successfully converts a significant portion of its user base to paid subscriptions, it would decouple its financial health from the volatility of the ad market. This transition would signal a fundamental shift in how the company monetizes its platforms, potentially leading to a higher valuation multiple as investors prize recurring software revenue over cyclical advertising spend.
