Buys and Sells of Meta Stock
I increased the Meta position yesterday shortly after the release at a price of $307 by 8% after a strong quarter which showed an impressive gross margin and beats across the board.
While Meta CFO Susan Li warning about a volatile macro in 2024 is certainly worrying i decided against reducing the position again at current prices as i believe that product advancements will have a significantly larger impact on Meta over the long term compared to any regular potential short term macro impact.
This means that i am comfortable to continue holding Meta in case there are further price declines and might consider increasing the position at a certain level (E.g. around $230)
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I reverted my decision and sold the additional 8% of shares + another 8% at $294.
My main reason is cash management concerns, as we would want to increase the cash allocation ahead of a possible downturn to be able to act on new opportunities.
Depending on our economic analysis, I will identify further areas to raise the cash %.
We also have a second sign of weakness in advertising from Amazon’s comments.
I increased my position today at an average of $438 by 20%.
This is substantial, given the overall size of the position.
My main reason is progress on Llama 3, which is now only one year after launching in the position to compete with the worlds leading AI models from the likes of ChatGPT & Google and my belief that Meta could build the worlds leading AI given the amount of training input it gets. (In any case it would be able to personalize & know people the best which is important for assistant or shopping functions)
I also believe that Meta is best positioned to provide access to GPT-style chatbots as it controls the world’s largest chat applications like Whatsapp.
Strategically and due to the massive potential AI holds, I believe it is more prudent for a company like Meta to overinvest than to underinvest to help secure a very strong position in the area.
If future promises like “agent-style” bots for businesses that could revolutionize customer service or AI-assistants that could advise the user on purchasing decisions don’t materialize, Meta could still scale back without significant financial loss on the grand scheme of things.
Additionally, I think the current divestiture procedure of TikTok provides a small tailwind, in line with our original thesis.
In summary, I believe things are developing well for Meta, and the sharp sell-off appears to be an overreaction and buying opportunity. While some investors are leaving due to higher looming costs the prospects of an AI revolution might be interesting for others. Ultimately the coming years will decide who is correct. In the short term the stock could be increasingly volatile as both ugly quarters and AI euphoria appear to be possible.
Fundamentally and in the long term, I view the risks as limited due to the above-outlined possibility of scaling back and an otherwise fundamentally very positively developing business.
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