META
📈 Meta reported strong revenue growth of 16% year-over-year, reaching over $42 billion, with net profit surging 35% due to effective cost controls.
⚠️ Capital expenditures nearly doubled, raising concerns about future profitability as these investments in servers and infrastructure grow much faster than revenues.
⚖️ The company trades at 21-23 times earnings, a valuation comparable to the 10-year U.S. Treasury bond, while also facing an ongoing antitrust lawsuit seeking a significant financial settlement.
@invertirdesdecasa:
“Metaplatforms, it closed around $590; the market is not yet open today. This is as of the close on May 7th. Metaplatforms had a slight drop year-to-date from a peak of around $720. And it capitalizes, at the time of recording this video, don’t forget, you always have to think about the entire company, at approximately 1.5 trillion dollars. And don’t forget, if the whole company is cheap, your share, that little part worth $587, is too. As always, Metaplatforms brings us a first chart that summarizes the most important points of its business quite well, not all of them. Revenues grew, as you see here, very strongly, 16% year-over-year, to over 42 billion dollars. Total costs were kept quite well controlled, although share-based compensation, meaning stock compensation expenses, are a bit high and have always been a bit high in Metaplatforms’ case. The truth is that all other costs are being controlled quite well, all of which meant that as costs grew slower than revenues, it leveraged operationally quite well, and net profit and the net profit margin to sales grew much faster. That is, net profit grew faster than sales due to this cost situation we’re seeing. Lower taxes this quarter meant net profits reached a little over 16.6 billion dollars, growing 35% because it paid, or rather, had to set aside less for taxes. And since the company repurchases shares, partly also to compensate for this share-based compensation which ends up meaning a stock issuance, it repurchases that, so the profits for each investor grew even a bit faster at 37% year-over-year. 3.43 billion people open an app from its family of applications once a day. Tell me, if you’re an advertising company and you want to reach as many people as possible, who are you going to look for? Yes, impressions, meaning ads shown, grew by 5% year-over-year, improving prices. These had fallen a lot in 2022, 2023, and are improving quite a bit. And here I’d like to highlight this, the capital expenditures, which at the same time is what’s highlighted below, growing quite fast, practically doubling its capital expenditures, meaning what the company spends on plants, properties, and production equipment. We have a conclusion from this, same as the next company, doubling year after year. And revenues are not doubling. Yes. And these are expenses for plants, properties, production equipment, i.e., chips, servers, all this that you’re reading these big techs are buying, which will depreciate tomorrow, will wear out with use, will have to be replaced. So, we’ll reflect on this towards the end of the video because, as you’ll see, capital expenses are growing at a much larger rate than revenues. And of course, before moving on, needless to say, well, a spectacular tower of cash despite the expenses it’s making, and it continues to return a lot of money to investors through dividends and buybacks. Now, Metaplatforms’ valuation. Last year, since we’re just a bit into this 2025, last year it generated 62 billion dollars in net profits. And for this year, I would say if nothing serious happens macroeconomically, beyond the excellent quarter it had, it also projects, based on the orders it has and all these advertising spaces it sells, a good second quarter. There’s still a long way to go, but I would say we could be around 70 billion in net profits for this year 2025. There’s a long way to go. Yes. The truth is that with all this information, we have to say that versus 2024 or what is expected for 2025, taking an average, it trades or capitalizes at 23 to 21 times the profits the business produces. That is, I pay so much, and that price I pay to acquire the company is equal to an average of 21 to 23 times the profits the company produces. If I compare that profitability with the profitability offered by a 10-year U.S. Treasury bond, the safest asset in the world, today we are more or less at that same yield. That is, the bond practically has the same valuation multiple as Meta Platforms. And we’ll also draw a conclusion on this towards the end. Yes, this is the valuation multiple. I should tell you that there is an antitrust lawsuit in progress to force Metaplatforms to sell or divest, I don’t know if I’m saying it right, Instagram and WhatsApp, even though it had the approval of regulators at the time of making the purchases. And from sources, nego, sorry, rumors that are heard, The Wall Street Journal reported at the time that Metaplatforms offered 450 million to close the lawsuit; it was not accepted. It offered 1 billion; it was not accepted. The U.S. government supposedly wants 18 billion dollars, supposedly rumors, to end this process. In some podcast, I said a lawsuit, in some cases, is ‘how much do you want?’, but of course, it’s just an opinion of a former lawyer, and let it be clear, these are rumors, but well, ultimately, reported by the WSJ.”
Watch the exact part of the video where @invertirdesdecasa talks about Meta Platforms here:
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Read more articles by the world’s top 100 analysts on Meta Platforms (META) at the following link. META stock.
