This topic is centered around Meta Platforms and our investment in it.
Discussion about Meta in archived discord channel.
Note: → Old Discussion sections to be updated and included here.
@Magaly since you are asking some questions that could be interesting for everyone i thought this could be a good moment to switch the discussion to a bit more public place in the forum.
This also allows us to test the forum more extensively while avoiding that too much content get’s “buried” in Discord.
You can find the start of the discussion here on Discord.
Discussion in Discord
will you take Meta profits if it gets to $300?
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@MagalyNH6
will you take Meta profits if it gets to $300?
Pirate Captain — Today at 6:45 PM
It depends on our findings of the above mentioned topic, the state of the economy, our assessment of small businesses etc
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What are the major resistance lines you are seeing?
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@Pirate Captain
It depends on our findings of the above mentioned topic, the state of the economy, our assessment of small businesses etc
MagalyNH6 — Today at 7:07 PM
I just think it could reach it before their is more certainty about that.
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@Pirate Captain
What are the major resistance lines you are seeing?
MagalyNH6 — Today at 7:09 PM
305 and 340 maybe. It basically has had none since $225
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@MagalyNH6
305 and 340 maybe. It basically has had none since $225
Pirate Captain — Today at 7:28 PM
What about current levels? Do you think appox. at $287 there could be a resistence at well?
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@MagalyNH6
I just think it could reach it before their is more certainty about that.
Pirate Captain — Today at 7:34 PM
Unless we find some strong red flags or data that suggest negative surprises i will be hesitant taking profits. AI seems to be a very strong theme and a wave that can surfed for some additional times as businesses get reevaluated. Additionally i believe we are only now beginning to approach more reasonable and neutral valuations levels from a fundamental point of view. Meta is not ultra cheap anymore but also not crazy expensive.
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@Pirate Captain
What about current levels? Do you think appox. at $287 there could be a resistence at well?
MagalyNH6 — Today at 7:41 PM
Yes, around that, is the end of the crazy gap that happened in 2022. But is probably weaker.
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@Pirate Captain
Unless we find some strong red flags or data that suggest negative surprises i will be hesitant taking profits. AI seems to be a very strong theme and a wave that can surfed for some additional times as businesses get reevaluated. Additionally i believe we are only now beginning to approach more reasonable and neutral valuations levels from a fundamental point of view. Meta is not ultra cheap anymore but also not crazy expensive.
MagalyNH6 — Today at 7:42 PM
What metric do you use for your valuation assessment? I have heard fears of a AI bubble, like the internet one. But short term this would mean crazy returns too.
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@MagalyNH6
What metric do you use for your valuation assessment? I have heard fears of a AI bubble, like the internet one. But short term this would mean crazy returns too.
Pirate Captain — Today at 8:02 PM
My main valuation metric is always P/E. I am expecting some bullish catalysts for EPS of Meta in the near term from things like
- Effects of cost cutting reaching the button line
- Higher ad impressions as both Instagram and FB are getting better through AI and short form video and people spend more time in them.
- Higher ad engagements due to already incredibly good matching of advertisers with people which i expect to improve further (Short form video is perfect for rapidly training an ai on what people like)-> Higher ad prices → Raising margins for Meta → Higher EPS. If you take Metas Metaverse investments into account, which they could reduce at any time Meta EPS is already very high. I think i wrote something about that shortly after the release of last quarters numbers. Additionally i am very bullish on the monetization potential of Apps like Whatsapp. (Probably wrote something about that before as well + a few more bullish reasons from september last year can be found in old sheets like here (1) or in the Wiki.) Overall we need to improve a lot in communicating the investment thesis and eventually displaying it in a compelling way to the community so it is good that you are asking questions. Eventually i even want to attempt do model certain impacts and play around with numbers more like
- How much exact eps impact are we expecting from cost cuts
- How will Metas margin develop in different ad impression and pricing scenariosetc. The closer we are getting to valuations i consider approximately neutral, the more important is this. (1) https://docs.google.com/spreadsheets/d/1UNG7ddMmZnKZK-Q0ePI1yPcKyutXw05gb3xVpS3jDJ8/edit#gid=595611303&range=A104
Access Google Sheets with a personal Google account or Google Workspace account (for business use).
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The great thing for transparently + effectively communicating investment reasons is also that false assumptions can be discovered and challenged way easier
@Aron I will close the Meta channel in Discord temporarily. This means that all regular activities like posting news should be done in this topic.
(Note: The great thing about Discourse is that topics can always be broken down. If we realize that we want to have two Meta topics one for discussions and one for news we can still separate the two in hindsight)
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To kick off this topic with the last message in Discord and as i believe those reasons could be interesting for anyone, here are main reasons why i am still bullish on Meta
(See hidden content from the msg above or our Discord channel for the full conversation)
I am expecting some bullish catalysts for EPS of Meta in the near term from things like
- Effects of cost cutting reaching the button line
- Higher ad impressions as both Instagram and FB are getting better through AI and short form video and people spend more time in them
- Higher ad engagements due to already incredibly good matching of advertisers with people which i expect to improve further (Short form video is perfect for rapidly training an ai on what people like)
→ Higher ad prices → Raising margins for Meta → Higher EPS.
If you take Metas Metaverse investments into account, which they could reduce at any time Meta EPS is already very high. I think i wrote something about that shortly after the release of last quarters numbers.
Additionally i am very bullish on the monetization potential of Apps like Whatsapp. (Probably wrote something about that before as well + a few more bullish reasons from september last year can be found in old sheets like here or in the wiki)
Critique of @Magaly on inconsistent standards between bullish stock assumptions and bearish macro assumption in this separate topic.
@moritz I agree with the bullish statements you have mentioned except that touching on Metaverse. Based on sentiments out there it doesn’t look like Meta will reduce Metaverse spend any time soon. I think they have mentioned time and again that they are investing in Metaverse for the longterm. But we can’t be sure as the current macro environment can force them to reduce spend in less/non profitable projects.
They could be left behind if they do it. Unless is something everyone is doing.
100% agreed.
My argumentation is not that Meta will reduce its Metaverse spend but that the underlying profitability of the core business is there as well as that Metaverse expenses have some value.
So there are basically two scenarios I am seeing:
- Meta will reduce it’s Metaverse spent in a few years. This means it’s EPS will go back up.
(Here is why looking at the Metaverse investment as temporary is important:
For simplicity reasons let’s assume Metas Metaverse loss will be 5$ EPS per year for 5 years after that it will be 0. In this case, $25 stock value per share has been lost. That is bad but manageable as it is close to 10% of Meta’s current market cap. If you apply a P/E though and you assume that Meta earns 10$ EPS/year with Metaverse spend and 15$ EPS/year without Metaverse spend you might get the impression that Metaverse expenses reduces Metas value by 33% or make the stock 33% more expensive which is wrong)
- Metaverse Investments will increasingly start generating revenue. In this case expenses have not been losses but investments into the future.
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6 posts were split to a new topic: Meta News