Meta rises after announcing adds in WhatsApp

Shares of Meta Platforms (META) are on the rise on Monday after the social media giant announced that it will be bringing channel subscriptions, promoted channels and adds in Status to WhatsApp, 11 years after acquiring the company for $19B. The ads will show within WhatsApp’s “Updates” tab.

NEW FEATURES: Meta announced that it is introducing new features in WhatsApp’s “Updates” tab, which is home to both Channels and Status. The Updates tab is where users discover something new on WhatsApp and it’s now used by 1.5B people per day globally. Now the Updates tab is going to be able to help Channel admins, organizations and businesses build and grow. “Subscriptions, promotions and ads will appear only on the Updates tab, away from your personal chats. This means if you only use WhatsApp to chat with friends and loved ones, there will be no change to your experience at all,” the company explained.

“We’ve been talking for years about how to build a business on WhatsApp in a way that doesn’t interrupt personal chats, and we believe the Updates tab is the right place to introduce that,” Meta said. Nothing changes about people’s personal chats, which remain end-to-end encrypted and are not used for ads, the company added.

“To show ads in Status or Channels you might care about, we’ll use limited info like your country or city, language, the Channels you’re following and how you interact with the ads you see. For people that have chosen to add WhatsApp to Accounts Center, we’ll also use your ad preferences and info from across your Meta accounts. We will never sell or share your phone number to advertisers. Your personal messages, calls and groups you are in will not be used to determine the ads you may see.”

The company will be rolling this out slowly over the next several months.

BETTER AD MARKET OUTLOOK: On Monday, Oppenheimer raised the firm’s price target on Meta Platforms to $775 from $665, while keeping an Outperform rating on the shares. With the macro and advertising environment better than feared vs. six weeks ago, the firm is increasing its estimates and price target Oppenheimer is increasing FY25/FY26 revenue 4%/1%, reflecting 17%/15% ex. FX growth, implying 102bp/63bps share gains, based on industry digital growth of 10%/12%. TikTok Q1 tailwind is potential near-term risk, assuming no ban, while longer-term risk is Meta falling behind on AI model development, the firm notes. As a result, Oppenheimer is now forecasting 2025/2026 capex of $68B/$85B and EPS $25.41/$28.23, up 6%/11% year-over-year. 

PRICE ACTION: Shares of Meta have gained almost 3% and are trading at $700.65 on Monday morning.