According to the financial app, Meta Platforms (META.US) stock has performed exceptionally well this year, but analysts at Bank of Nova Scotia advise investors to wait and not buy now.

Analyst Nat Schindler at the bank started covering Meta stock and gave it a 'hold' (Sector Perform) rating, with a target price of $585, lower than Meta's closing price on Friday. Meta's stock has risen by 66% this year and by 86% in the past 12 months. On Friday, meta platforms closed up over 1% at $589.95, while the s&p 500 index rose by 0.61%.

There are many reasons for the rise in Meta's stock. Meta has called 2023 its 'year of efficiency' and announced a series of cost-cutting measures. In addition, investments in generative artificial intelligence have boosted this year's stock price.

Meta's stock has also benefited from investors' optimism about virtual reality projects, such as Meta Quest headphones and smart glasses, despite the relatively high costs of these projects.

During the July earnings conference call, Meta's CFO Susan Li stated that the Reality Labs division responsible for VR products operated at a loss of $4.5 billion in the second quarter. About 98% of Meta's revenue comes from advertising, mainly on its social media platforms Facebook and Instagram.

Schindler wrote in the research report that Meta needs to maintain users' interest in its social media platforms, which poses significant risks. He pointed out: "Recent studies have shown that users' active posting has been declining, with most American adults becoming more selective when posting content." He also mentioned that privacy concerns, misinformation, and ad saturation, among other issues, are reducing the time users spend on social media, which could gradually put pressure on Meta's key indicators.

The decrease in daily active users will suppress revenue growth. This risk, coupled with the high costs of the company's projects in ai and virtual reality, is why Schindler advises investors to wait and see. Data shows that out of 70 analysts surveyed by FactSet, 59 recommend buying Meta Platforms, 9 recommend holding, and 2 recommend selling.