Meta Platforms, Inc. (META)

Ad dollars are shifting from print to digital. Google, Facebook and Amazon are basically a money tunnel, collecting that ad revenue. But he worries about regulations against Facebook, given the 2016 U.S. election, while others are unhappy with the content FB is including. So, nobody is happy with FB. Data breaches don't help.

Does not fit into their valuation they are looking at right now. They sold it in the spring. Big risk for this space is the regulatory moves, which can be very punitive. They are investing in security that they did not have to before. There is a cloud hanging over Facebook. Not on their list right now.

(Past Top Pick Aug.22, 2018, Down 8%) Still believes in it. He doesn't expect blowout earnings, since from August to now we're still in negative sentiment. Even now with all this negativitiy, FB is doing $20-billion cash a year. Who else does that? Companies like this are very good at managing expenses.

The big issue is how they deal with people use FB to subvert elections. Will this have an effect on their next numbers? Also, how do they monetize Instagram? Some management turmoil here. Also FB usage is down, though Instagram use is up. Google is easier to understand from an online ad perspective.

Recent news good? Doesn’t think the Instagram founder’s leaving is negative, though the security breach is. Trading at 17x 2020 earnings. Took down growth, probably being conservative. Modelling 25% share growth, trading at a market multiple, for something that’s this disruptive, it’s a really good deal. You can buy it.

It's starting to breakdown, meaning it's broken through its moving average. If it takes out its last low of $160, FB is in trouble. Some tech stocks are breaking down like this.

He sold FB in February. Something didn't feel right; he didn't expect the big drop in the spring, then it rallied, then dropped again. There's too much of FB happening in the media like the Instagram founders leaving today. Too much attention and he doesn't like that. Wait till it goes from the headlines to the back page before you get interested again. FB is very undervalued. He doesn't want to be in it right now. He's not on Facebook now. That said, it looks amazing now going forward and the story isn't over. Really good valuation.

After their report in July, they dropped a whopping 20%. They're smart by traditionally underpromising; also smart by deflecting the current privacy issues. Now, they are undervalued. Peel back layers to find a company with a massive economic moat of 2.2 billion users. Those who've left Facebook are going to Instagram--which Facebook owns. They also own WhatsApp, which has a billion users. The return on ad spend is better than Google, he understands from advertising people. He will add to his position. (Analysts' price target $205.12)

Following the drop in August it is now a buy on their list. There are over 2 billion users around the world. The fear of privacy are behind them and they should generate 20% growth in revenues and margin. This is a good opportunity to buy on the dip.

They won the crowd with Facebook and Instagram. They got through the Cambridge Analytica scandal. The shakeout has taken place. They have no debt. ROE is 20%. (Analysts’ price target $205.12).

It is all about Instagram. He thinks it is going to be the shopping mall to the world. Worldwide. The regulation problems are providing a bigger moat to this company. (Analysts’ price target is $205.12)

The stock has broken technically. All social media has been pressured. Short-run, there's noise. Until technicals improve, he won't enter this. He'd wait for a better entry point. Remember: a lot of investors who bought when the stock climbed to $220 will sell when FB rises to those levels again. Why wait for that?

He reduced his exposure to FB because it was getting too large in his portfolio and because of regulatory risks and costs. It's now down to a reasonable valuation. You can buy it here. There remains headline risk. But FB is doing the right thing to improve security, and this will get politicians off their back; it'll cost them money to do this. They're still growing rapidly, particularly in Instagram and Messenger. Well-run. The stock will be in the doghouse, but give them credit for using AI to weed out bad actors on their platform. Look long-term.

It has certainly gotten cheaper. It is hard to give recommendations over the long run on this stock. Despite their earnings miss, they have still not recovered. Their valuation is okay and reasonable relative to other tech stocks. For now it is a neutral and if it keeps declining it will be a sell.

More recently, stock has gotten hit because of privacy and data issues. Trading below 200-day moving average. Long-term, we’re not going to shift from targeted, digital advertising. Trading at 22x earnings, with a 22% growth rate, which is pretty cheap. Put your stop losses in place, but he continues to like it.