Technology conglomerate Meta Platforms, Inc. (NASDAQ: META) owned social media platform Facebook recently revealed that the company will now allow creators to make money from videos with licensed music.
Shares of the company declined by more than 2% to close at $165.75 in yesterday’s extended trade.
Meta’s New Feature Rolled Out to Address Competition
Through this move, Facebook is aiming to compete with its principal rival in the video-sharing space, TikTok. Facebook has been left behind in the wake of TikTok’s popularity, with the ByteDance-owned app becoming the most downloaded app of 2021.
According to a company blog post, creators on Facebook will receive 20% of the revenue share through in-stream ads on videos that are longer than 60 seconds. Notably, the song should be from the platform’s licensed music catalog. Meanwhile, the new feature will be beneficial for Meta as well as the rights holders of these songs, as each will get a separate share.
The feature is live now on Facebook. However, Instagram reels will not be eligible for monetization.
Management’s Commentary
According to a company blog post, “With video making up half of the time spent on Facebook, music revenue sharing helps creators access more popular music, deepening relationships with their fans—and the music industry.”
Wall Street’s Take
Yesterday, Mizuho Securities analyst James Lee reiterated a Buy rating on the stock with a price target of $250, which implies upside potential of 50% from current levels.
Overall, the Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 29 Buys, seven Holds, and two Sells. The META average price target of $259.78 implies the stock has upside potential of 55.9% from current levels. Shares have declined 55.3% over the past year.
TipRanks Website Traffic
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Meta’s performance this quarter.
According to the tool, the Meta website recorded a 14.04% monthly fall in global visits in June, compared to the same period last year. However, year-to-date, Meta website traffic increased by 10.41%, compared to the previous year.
Meta’s mixed website traffic trends allude to the fact that although the company’s offerings have strong demand, its dominance in the social media space is not what it used to be and consumers have other options now.
Learn how Website Traffic can help you research your favorite stocks.
Key Takeaways
TikTok’s rapid growth has been a cause of concern for Meta, as it has observed that its primary audience of the young cohort has preferred the ByteDance-owned app rather than its own offerings. In such a scenario, Meta’s move to allow content creators to monetize their videos appears to be a strategic move to effectively compete with TikTok.
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