TLDR
- Meta stock rose 2.8% Monday after WhatsApp announced it will introduce ads for the first time in the app’s history
- WhatsApp’s Updates tab is used by 1.5 billion people daily, presenting a massive advertising opportunity
- Meta plans to roll out AI-powered ads across its platforms by 2026, potentially disrupting the $64 billion ad agency market
- The move comes despite reduced ad spending from Asia-based e-commerce companies due to tariff changes
- Meta acquired WhatsApp for $19 billion in 2014, despite founders’ previous opposition to advertising
Meta Platforms stock jumped 2.8% Monday following the announcement that WhatsApp will introduce advertising for the first time in its history. The messaging platform revealed new features for its Updates tab, marking a major shift in strategy.
WhatsApp’s Updates tab now serves 1.5 billion daily users. The platform spent two years developing this section as a discovery hub for users.
The advertising rollout represents a complete reversal from WhatsApp’s original stance. When Meta acquired the company for $19 billion in 2014, WhatsApp’s founders were vocal critics of advertising.
MORGAN STANLEY SAID $META WHATSAPP ADS COULD GENERATE $5B ANNUALLY
Ads will launch in the Updates tab (~1.5B daily users); base case assumes $PINS-like rates, but Facebook-level monetization could push revenue past $6B by 2027. pic.twitter.com/VO4Z1MSmRd
— Shay Boloor (@StockSavvyShay) June 18, 2025
A 2012 blog post by the founders stated that “when advertising is involved you the user are the product.” They emphasized their desire to keep WhatsApp ad-free to maintain user experience.
Breaking New Ground in Messaging Apps
Oppenheimer analyst Jason Helfstein rates Meta as Outperform. He noted that no technology company has successfully built an effective advertising product within a messaging app.
“If Meta can show conversion and attribution metrics from WhatsApp, they could unlock another leg of growth,” Helfstein said. The platform boasts over 100 million US users and more than 2 billion global users.
Meta hinted at these changes during its first-quarter earnings call on April 30. CFO Susan Li mentioned “tens of billions of views of status posts on WhatsApp each day.”
Li highlighted the company’s continued investment in the updates tab as a destination for user engagement. She also emphasized Meta’s focus on creator tools and original content.
However, Li also revealed challenges in the advertising space. The company has seen reduced spending from Asia-based e-commerce exporters following tariff policy changes.
The Trump administration’s removal of the de minimis exemption affected lower-cost imports. This change impacted companies that previously avoided tariffs on certain goods.
AI-Powered Advertising Revolution
Meta has announced plans for AI-powered advertising across its platforms by 2026. This technology could automate brand advertising entirely on Meta’s systems.
The AI advertising market represents a substantial opportunity. US advertising agencies alone generated nearly $64 billion in revenue in 2022 according to Statista.
Meta’s AI could leverage proprietary user data for personalized advertising. The system might create custom ads tailored to individual user preferences and behaviors.
These AI-generated ads could potentially outperform traditional agency-created content. The technology might identify and highlight features most relevant to specific customers.
Meta generates approximately $175 billion in annual revenue. Nearly 97% of this income comes from advertising across platforms like Facebook and Instagram.
The company’s stock has gained 20% this year, reaching $701.58 in Monday afternoon trading. Over the past five years, Meta shares have delivered a 192% total return.
This performance significantly outpaced the S&P 500’s 102% return over the same period. The WhatsApp advertising launch could provide another growth catalyst for the social media giant.
The advertising rollout occurs while Meta faces an antitrust lawsuit from the Federal Trade Commission. The case alleges Meta eliminated competitive threats through acquisitions of Instagram and WhatsApp.
Meta continues investing in the Updates tab as user engagement grows across its messaging platform ecosystem.
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