It has been a superb few years for traders in social media large Meta Platforms (NASDAQ: META). Meta inventory has grown by at least 279% over the previous 5 years.

That type of progress definitely grabs my consideration.

So, might now be the time so as to add Meta inventory to my portfolio?

Robust place in a large market

Meta owns quite a lot of social media platforms which have in depth attain in a large market, comparable to Instagram and Fb. On prime of that, it’s attempting to maneuver ahead in an evolving know-how panorama with its investments in areas like augmented actuality.

That a part of its technique stays to be confirmed. However the tried and examined social media enterprise continues to be a giant cash spinner for Meta.

Final yr, the enterprise grew revenues by greater than a fifth. Web earnings soared by 59% to $62bn.

The corporate’s present market capitalisation of $1.5trn could appear giant, however these earnings assist put it in perspective. Meta trades on a price-to-earnings (P/E) ratio of 24.

That doesn’t look low-cost to me, particularly given final yr’s sturdy progress in earnings. If that seems to be a one-off slightly than a brand new norm, the potential P/E ratio is even greater.

However I reckon Meta has some belongings that would assist the enterprise to carry out effectively for many years to come back.

For starters, it has a world put in consumer base within the billions. It additionally advantages from community results, which means that as customers spend extra time on platforms like Instagram, it turns into extra engaging for different customers, basically resulting in a virtuous circle.

In the meantime, Meta continues to spend closely on areas like generative AI. It stays to be seen whether or not these types of efforts outdoors its core enterprise will likely be expensive blunders or a grasp stroke of foresight.

If it goes effectively, that might be a spur for additional progress within the worth of Meta inventory.

I received’t be shopping for in

That danger sits uneasily with me, particularly as I really feel the present Meta inventory price provides me an inadequate margin of security.

However it’s not the one danger I see.

I reckon the halcyon days of social media are over and each customers and regulators at the moment are higher understanding a number of the hurt it could possibly trigger. In that sense I see the social media trade now as akin to cigarettes within the Nineteen Sixties. Over time, I count on it to develop into extra closely regulated, consuming into income for companies like Meta and likewise probably resulting in the breakup of very giant networks.

I see Meta’s enterprise as creating loads of social hurt alongside extra optimistic features, so simply as some individuals select to not purchase tobacco shares, I’d not wish to personal Meta shares.

Even when I wished to, the present valuation seems excessive to me. So, it’s secure to say I can’t be investing!