Jason Del VicarioMeta Platforms IncMETACOMMENTSep 18, 2017

He likes all the hyper-scalers but META has only an 18X PE ratio and has the best upside over the next 12 months. It has had the most incremental advertising dollars over the past five years and is growing its business. Has $250 billion in revenue. It is down because investors feel it is spending too much on AI. It is using AI already in its core business and expanding it to new products. Should be the biggest beneficiary of the AI rollout.
Buy 71  Hold 8  Sell 0

Financial results were excellent. But $125B in spending this year (at the low end), and CEO has been vague about where returns will be seen. Sales up 30% last quarter, clearly benefiting from AI (content recommendations and ad targeting).

Noteworthy is that they keep all compute for themselves, and don't sell to others. This avenue could be monetized in future.

They had 33% growth in the last quarter, the fastest in 5 years when revenues were $29 billion compared to $56 billion now. They have a record 3.5 billion daily active users and adding giant data centres and spending $150 billion.

AI spending is going to get to a point that the market just won't accept. As long as share price continues to be "OK", these companies will keep spending.

Problem here is that it's spending almost all of cashflow on capex, now outspending its own profitability. Started taking on debt. May not matter right now, but sometime it will.

He just bought a lot more yesterday. Extremely reasonable valuation around 16-17x PE. Revenues growing an incredible 30%, which is hard to find in such a big company. 

The street will eventually reward it. Problem is that its vision isn't properly articulated. Behind on learning-language models.

Meta has the biggest question mark in the megatechs because they don't have a direct link between a public cloud to sell credit credits against to offset their large capex.

They just reported. He didn't like to hear that they raised capex by 10%. Then again, they had the fastest revenue growth in 5 years, so maybe they should spend, though he'd like more justification on that spend. Revenues are up 30%.

His choice among the Mag 7 because of where it's trading. Fell on eye-popping AI concerns and legal challenges. Whole tech sector swooned. Cut workforce 10%, scrapped plans to hire. 

He is concerned about the lawsuits, but it's something they'll have to get through and write some really big cheques. Like tobacco. Already priced into the stock.

Leadership is smart. Capex is high, but bolstering position in AI. Trades ~17x PE  and growing 17%. Yield is 0.32%.

Trades inexpensively ~21x PE, around market multiple. Yet growth rate is considerable. The low multiple allows the stock to absorb any potential disappointment.

He just bought shares after being underweight this name. Tech hit a bottom last Monday with peak pessimism, and started to rebound last Monday. He'd like Meta to walk back capex at earnings. Has good momentum.

Trades at only 16x future earnings. Meta go hit so hard recently, but today they announced a deal with Broadcom. A fantastic stock.

Lawsuits take many years. They are a dominant platform that executes. Is watching it. He nearly bought it a few days ago. Whatsapp, Facebook, Instagram--it's a cash-flow machine and likes it. He will buy this at the right entry point and hold it.

They just lost two lawsuits in New Mexico and California concerning social media addiction. In his experience, it's more likely that state cases get overturned on a federal court. The sell-offs about these suits are a buying opportunity.

Trades at 16x PE, so cheap, growing at 26% revenues and 20% earnings. Because of AI, Meta raised guidance for both numbers already. She may add at these levels.