Why Launching Subscription Services Could Be a Genius Move for Meta Platforms
Key Points
Meta's business relies heavily on ad revenue, but that could change in the future.
It recently unveiled many types of subscription options for its apps, which should unlock more growth potential.
The stock's valuation is much more attractive given these new growth opportunities.
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Popular social media apps such as Facebook, WhatsApp, and Instagram have made Meta Platforms (NASDAQ: META) one of the most valuable tech companies in the world. Those platforms attract billions of people every day, and for marketers, they can be easy ways to reach their target markets.
Meta, however, has recently announced plans to diversify its business, potentially becoming less dependent on ad revenue in the future. It is testing out subscription plans that could unlock more revenue opportunities for its operations. Here's why I think that can be a genius move for the company.
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Why subscriptions could make plenty of sense for Meta's apps
Paying to use social media isn't going to be practical for everyone. But for added capabilities and being able to have premium features and customization options, paying a few dollars per month, which is what WhatsApp Plus, Instagram Plus, and Facebook Plus are priced at, may not be terribly high for people who use those apps heavily.
Subscriptions may be particularly worthwhile for content creators and marketers if they enable them to create more enticing posts that reach broader audiences. For example, on X, formerly known as Twitter, users can pay for premium plans to make longer posts and have boosted replies. A similar type of approach could make plenty of sense for Meta, whose apps are already popular with advertisers.
The social media company is also testing subscriptions related to artificial intelligence (AI), with a Meta One Plus subscription costing $7.99 per month and a premium version priced at $19.99. The AI plans will effectively put Meta's AI to the test against other chatbots and should unlock a new source of revenue for the business. And with Meta having the advantage of already having access to a lot of user data from its apps, its AI can be well-positioned to offer more personalized advice and suggestions.
Does this make Meta's stock a buy?
It's been a challenging start to 2026 for Meta, whose shares are down around 7% thus far. But with some potentially exciting new growth opportunities to tap into with subscriptions, that can accelerate its growth rate and make it a much better buy moving forward. The stock trades at a fairly modest price-to-earnings multiple of 23, which is lower than the S&P 500 average of nearly 26.
For long-term investors, the stock could be an attractive buy right now as the business may be on the cusp of some incredibly promising opportunities. Even if subscriptions don't appeal to every user, they could still potentially add billions of new revenue for Meta in the long run.
Should you buy stock in Meta Platforms right now?
Before you buy stock in Meta Platforms, consider this:
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.
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