fool’s view
Meta Platforms may be best known for its social media services, but it has also become a leading company in artificial intelligence (AI). Meta AI, the company’s chatbot available on Facebook, Instagram, WhatsApp, and Messenger properties, has become a leader in generative AI.
As of the company’s third quarter, Meta AI had more than 500 million monthly active users. And in early October, Meta announced that more than 1 million advertisers created more than 15 million ads using its generative AI tools last month.
Although there is still a lot of uncertainty regarding generative AI, we are in an advantageous position having the largest user base of any AI chatbot. And Meta’s advertising business continues to perform well with the help of its AI infrastructure.
Advertising revenue rose 19% to $39.9 billion in the third quarter, accounting for almost all of the company’s revenue.
Although some recent policy changes have been controversial, the meta platform is growing rapidly and delivering huge profit margins. The company’s stock price is also reasonably priced, with a recent price-to-earnings ratio (PER) of 29 times.
(The Motley Fool owns shares of and recommends Meta Platforms. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool. ) is a member of the company’s board of directors.
ask a fool
From IS, Grafton, Vermont: What are “defined benefit” and “defined contribution” retirement plans?
You may know it by another name. For example, a pension is a defined benefit plan because the amount you receive is determined in advance. In contrast, a 401(k) or 403(b) account is a defined contribution plan because you (and sometimes your employer) decide how much to contribute. For example, by specifying 5% or 10% of your contributions, your paycheck will be transferred to your 401(k) account.
Although you know the amount of each contribution, it’s unclear how much your account will grow over time, as it largely depends on the performance of the investments you choose.
Defined benefit pensions have become much more common over the past few decades, and defined contribution plans are now even more popular.
This has changed both risks and responsibilities. Employers have more responsibility in defined benefit plans because they must accumulate sufficient funds to meet future obligations. In defined contribution plans, employees decide how much to save and invest.
For more information about 401(k) plans and other retirement issues, visit Fool.com/retirement.
From RD in Adrian, Michigan: How should I invest the money I’m saving to buy a home in a few years?
Stocks are generally great for building wealth, but keep any money you need within 5 years (if not 10) out of stocks. The stock market can fluctuate, so you don’t want the stock price to plummet right before you withdraw your money for a down payment.
Keep short-term savings in safer places like high-yield savings accounts, money market accounts, or certificates of deposit (CDs). Good rates for such accounts can be found at Bankrate.com (under “Site Map”) or Fool.com/money (under “Banks”).
school of fools
Stock splits tend to excite many investors. That certainly sounds great. One day you might own, say, 100 shares, and a few days later you might own 200, 300, or even 700 or more. What’s not to like? However, that doesn’t mean as much as you might think.
Here’s why: Imagine you own 100 shares of Wireless Pie Co. (ticker: WIPIE), a company that delivers pies electronically. If the stock is trading at about $40 per share, the stock will be split 4-to-1. You now own 400 shares of Wireless Pie, but there’s a catch. As the number of shares increases, the price also adjusts downward proportionately. In this case, it would be about $10 per share.
So before the split, you owned 100 shares of $40 stock, for a total value of $4,000. After the split, you would own 400 shares of $10 stock for a total value of $4,000. A stock split doesn’t really change much. Note that there are different types of splits. Usually 2:1, but other types include 2:3, 1:3, 1:7, or 1:50.
For example, in June 2024, Chipotle Mexican Grill implemented a 50-for-1 stock split. Before the split, the stock was trading at about $3,300 per share, and after the split, it was trading at about $66 per share. To keep prices affordable for many investors, companies often split their stock.
“Reverse splitting” also exists and works as you might expect. In other words, the number of shares decreases while the stock price increases. Reverse splits are typically carried out by distressed companies to keep their stock from looking like a penny stock or to avoid delisting from stock exchanges that have established minimum price levels. .
Don’t get too excited about stock splits. Sure, it might be fun to suddenly own more shares, but the outlook for the company doesn’t change, and the total value of the shares doesn’t change either.
Also keep in mind that just because prices drop doesn’t mean stocks suddenly become bargains, and high-priced stocks can go even higher.
my stupid investment
From PK (online): My most disappointing investment move happened several years ago. I invested in both Apple and Netflix. I held on for a while and made good profits on both, but since I was a newbie to investing, I should have held on and never sold. These two sales wiped out $1 million in profit that could have been made.
Don’t get me wrong. My account worked, but it could have gone better. I’ve learned not to pay attention to business news. News is not created to provide thoughtful guidance. It’s to scare you and get attention.
The fool replies: It’s true that many headlines are designed to get attention, and many news stories don’t mean much to long-term investors. For example, if a company’s factory is affected by a fire, its performance may suffer, but it may recover and continue to grow.
It was smart to invest in both Apple and Netflix. Because both are doing amazing things. The trick to selling is to ask yourself whether you believe your stock will continue to grow and increase in value over time. In the case of great companies, investors who survive the hardships of many years, if not decades, are often rewarded handsomely.
(If you have any smart or disappointing investment moves, please share them with us. Email us at TMFShare@fool.com.)
who am i?
My roots go back to 1876 in Indianapolis. At the time, a Civil War veteran started me with the goal of developing and selling products that would relieve people’s pain. My staff treated World War I soldiers in France. In 1923, I introduced the first commercially available insulin. I mass-produced penicillin in the 1940s and was one of the first to produce the Salk polio vaccine.
Now with a recent market value of over $700 billion, I am a major focus of the pharmaceutical industry, working on diabetes, Alzheimer’s disease, immune system disorders, cancer, and more. I recently hired 46,240 people, more than half of whom are outside the United States.
who am i?
Forgot last week’s question? Find it here.
Last week’s answer: Greyhound
