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Take a look at recent price action for Meta Platforms (NASDAQ:META) stock and you might conclude it has topped out. Since August, shares have stayed above $300, but haven’t risen above $350.

META may be considered fairly valued at 22.8 times earnings, factoring in a digital advertising demand recovery, and the potential upside from its AI investments. Don’t jump to conclusions about selling or avoiding it based on this initial takeaway.

META Stock: Rising Caution

Last December, weak results, coupled with high skepticism about CEO Mark Zuckerberg’s planned big bet on the Metaverse, had Meta Platforms trading near multi-year lows. Optimists were arguing shares had fallen to a deep value price, while skeptics argued it had become a value trap.

Within months, however, it became painfully clear to those holding the latter view that those holding the former view were on the money about META stock. Thanks to revenue rebound and cost reduction efforts by Zuckerberg, the stock price surged from under $115 to over $300 per share between December 2022 and July 2023.

Rising slightly since then, META is up a total of 186.7%. However, as a new year beckons, caution is rising. Again, it’s easy to see why. The company has already realized the one-and-done benefits from reducing operating costs/headcount.

The digital ad market recovery may be close to wrapping up as well. Although shares may not triple in price like before, there is still potential for more gains.

What Will Drive the Next Series of Surges

Forget about META stock reversing course in 2024 or experiencing a year of weak returns. Shares could make outsized gains this year, just not as strong as the gains experienced during this year.

How? Meta Platforms may have ceased to be a cheap stock, but has its valuation gotten out of hand? Not quite. META’s valuation is at the lower end of the valuation range among “Magnificent Seven” stocks. Before you chalk this up to lower growth prospects, think otherwise.

According to sell-side forecasts, Meta Platforms is expected to report earnings growth of 22% next year. In 2025, earnings could rise by another 17.5%. Instead of being fully priced, or even overvalued, META may in fact have room to experience multiple expansion.

Yes, cost-cutting and a demand recovery for its existing business may not be enough to drive such earnings growth in the coming year.

However, don’t forget that the company’s AI capabilities are enabling it to better monetize its various platforms. There’s also still high growth potential with the company’s AR/VR hardware business. All of this points to continued strong results, which will drive the next series of surges.

Bottom Line: Still a Solid Buy

Stronger-than-expected results, plus multiple expansion, could really give META shares a solid boost. This will likely be enough to send the stock to $400, $425, or even $450 per share.

Meeting earnings expectations alone could boost the stock by over 20%, even if META doesn’t see multiple expansion next year.

Not too shabby, when you consider Meta could achieve similar moderately high gains in the years ahead. The company’s strategic focus on AI and AR/VR points to growth continuing to come in at an above average pace. With above-average growth, will most likely come above-average returns for long-term investors.

While so many are looking for an excuse to sell, hold onto your position if you currently own META stock. If you’ve yet to buy, feel free to enter a position at current prices.

META stock earns an A rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Original: META Feed: Why a META Stock Melt-Up Is Very Possible in 2024