Meta earnings - Why are folks on blind who make so much in RSUs so bad at valuation of stocks?

New
pboreos

New

pboreos
Yesterday 23 Comments

This company has one of the best balance sheet in the world. Had been trading at 15x free cash flow. The boomers at Blackrock or any of these big firms would get a hard on to own a business like Meta at 15x free cash flow even if revenue stayed flat. Most mature businesses trade at 10-15x cash flow. Sure they're pouring $10b into the MetaVerse, but even after that they managed a $30b+ free cash flow and a better operating margin than all tech companies. They're pouring money into R&D to figure out a better way of monetizing after apple banned ad tracking and having the best talent in tech you've to be sure they're gonna figure it out and return to growth next year. Even without the ad tracking it remains the best place to advertise on. WhatsApp is a hidden gem that still hasn't been monetized properly and is still growing. They'll monetize after user growth stagnates (user growth first, monetization later has always been their goal). Even with uncertain macro conditions, TikTok, apple ad tracking headwind and tough comps with last year where they had a Covid tailwind, they managed to eek out 7% revenue growth. What happens when the conditions improve and they develop better algorithms to work around the apple ad tracking ban? This is easily going to return to double digit revenue growth from next year. Being bearish at $300 is one thing but being bearish at $175? Everyone on Blind saying the stock is going to go down at $175 and trade at what? A single digit forward PE? This business was simply too cheap even if the MetaVerse bet fails. How can you be so bad at valuation?

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TOP 23 Comments
  • Google
    junior_pm

    Go to company page Google

    junior_pm
    Maybe and maybe not. There is a bear case here.

    DAU decreasing is a leading indicator of revenue decreasing. In addition , opex spending will reduce fcf and ebitda. I’m not really clear why operating margin went up but that could be a pure cost cutting thing.

    Decelerating top line, increased costs , increased competition , and no strong path for viable business model on Metaverse still makes the stock a long shot.

    7% revenue increase is pretty bad and in line with inflation.

    To me, it seems like the stock popped because it was pricing in even worse outlook. But just because FB didn’t do as badly as expected does not mean it is doing well.
    Yesterday 4
    • Amazon
      cheatah

      Go to company page Amazon

      cheatah
      Growing ARPU and increasing network effects from a continuing growing userbase are linked. This is a brief relief rally or a short squeeze. The market, including FB, won’t bottom until at least Q3.
      Yesterday
    • @pboreos. What's the strategy for increasing ARPU for Meta? More targeted ads? Subscription services? Highly doubt either is achievable.
      Yesterday
  • TLDR?
    Yesterday 1
  • FML I am joining in August and stocks pop now.
    Yesterday 4
    • New
      pboreos

      New

      pboreos
      OP
      Wouldn't your share price be locked for the month you signed the offer?
      Yesterday
    • Meta
      lolbunny

      Go to company page Meta

      lolbunny
      Avg of the month before you join. So for MSFT he/she/they will have average of July.
      Yesterday
  • TikTok
    awoiarq

    Go to company page TikTok

    awoiarq
    Good DD, OP. Completely agree πŸ‘
    Yesterday 0
  • Been saying this for a long time although I think the metaverse rebrand was dumb and hurt their perception a lot. I think they should have just rebranded oculus if they wanted.
    Yesterday 1
    • Amazon / Media
      Baobaab

      Go to company page Amazon Media

      PRE
      Deloitte, McDonald's, Ponderosa Advisors
      BIO
      Just glad to be on the fucking team.
      Baobaab
      Yeah, they could have just rebranded Oculus as Metaverse and created a platform for that β€œMetaverse” product. That would have been Facebook’s β€œgame” wing of the company. In the endβ€”this is what they’ll end up doing. πŸ€·β€β™‚οΈ.
      Yesterday