Stop listening to anything else other than your own. Just read the 10Q. After cutting the fat, its about 8-10 pages, every 3 months. Lets say you follow 20 companies. That about the size of one book every three months. Not an entertaining read, but definitely enriching one.
The 10-q is there in the SEC website[1]. The summery is a quick read[2]. Just read it like you would read a textbook. Read the same for APPL, GOOG, AMZN. Do the same for two other sectors. In total about 20 companies. Very quickly you see the patterns emerge.
In the context META, here is a quick summary
Besides the sequential increases of MAU, DAU, DAP, MAP, One thing that stands out to me is:
"We anticipate our full-year 2024 capital expenditures will be in the range of $30-35 billion, with growth driven by
investments in servers, including both non-artificial intelligence (AI) and AI hardware, and data centers as we ramp up
construction on sites with the new data center architecture we announced late last year."
Thats a lot of investment mostly in NVDA hardware. Expect NVDA to rise. This also means good for other suppliers, AMD, INTC, TSMC. The benefit for META will be apparent in a few quarters.
Thank you for this info and including links. Looking through the full 10Q[1] I don't see the summary[2] or link to it. How do you go about finding summaries for other 10Qs from other companies? I was trying to work backwards to find the summary from the full 10Q so I could do the same for other companies.
Jim Cramer recommended getting in on Meta around 220 IIRC and then it dropped over 50% and he cried because on his recommendation people lost half their investment.
> He'd be up huge if he held, but he 'paper handed'. Is he a dumb guy
ive come to believe its often a matter of solvency, theres only so long you can keep that money invested before people start wanting/needing it back. Especially with large economic shifts that weve been seeing.
I don’t think solvency was an issue here but another way of getting to the same place is that he felt he could deploy the capital more effectively elsewhere. He made a bet on Netflix because he thought he had some alpha. After he lost a third of it he had less faith in his original thesis and thus his allocation priorities changed.
Just for context Ackman’s 1.1B purchase would be worth about 2.25B today if he hadn’t sold it for 700M
Of course that doesn’t mean it was a dumb trade but his rationale in the letter doesn’t make a lot of sense to me. It has the vibe of something you would come up with if you needed to sound smart justifying a decision you had already made emotionally
> Jim Cramer recommended getting in on Meta around 220 IIRC and then it dropped over 50% and he cried because on his recommendation people lost half their investment.
Wait, someone actually traded on Cramer's advice? Please tell me this is a joke.
TBH I'm not 100% sure what lesson to take from this. If in 2022, you thought that a) DAU across the entire family of apps was as high as it ever was going to be and b) that the broader economy was about to enter a recession, causing marketing spend to plummet, is a P/E of 9 still a bargain? Isn't that supposed to reflect potential for future growth, and if all the eggs were in the metaverse basket...
Large cap stocks that have firmly exited the growth phase generally have a p/e of around 15. As long as you dont think profits will decrease a p/e of 9 is generally a hard buy.
Note that Intel had a P/E of about 9 as of March 2021 - I remember because I bought it. Three years later, with the stock having gone down by ~8%, its P/E is now 108. Oftentimes when investors discount a stock relative to earnings, it's because they expect earnings will decrease.
Well anybody will get wrong assumption on FB if he doesn't see the impact FB is having outside USA, especially in developing countries. it's the only game in town, a complete social package. Tiktok is another but it competes in one specific side.
At the time Meta had greater profits than even Walmart, thanks to very high profit margins. It was insanely cheap. The market was pricing in a disaster in which Metaverse losses somehow destroy the company, or loss of market share to TikTok. Neither of those happened.
I think meta's dip was always much more about Mark being unimpeachable than anything else. The market new $10 billion a year for the metaverse was a drop in the bucket, I think everyone was reasonably confident that meta would have a tiktok competitor. The issue was that investors thought Mark making "bad" decisions now meant he would continue to. Instead he instituted massive layoffs to show investors that he is thinking of them, so the stock went back up.
I think meta's biggest non mark issue was the apple tracking stuff that cost them billions of dollars.
Is that the lesson? There's a ton of sky-is-falling commentary/editorials on Seeking Alpha, YouTube, et. al. It's absolutely impossible to see fact from feeling.
Maybe it's time to start analyzing 10qs, I'm telling myself.
Sophisticated money is generally not. The average retail investor absolutely is. Most retail investors invest based on emotion not on fact. A lot of tech company employees justify their emotions as providing them an edge because they're in the industry, but they often likewise get hung up on factors that they find emotionally relevant but aren't actually market relevant factors.
Look at this other comment https://news.ycombinator.com/item?id=39222007 in this thread. A lot of it is just idle speculation based on the commenter's personal values. These are the analyses that drive retail investors to invest. I don't mean to pick on this commenter specifically; I just felt it to be very illustrative of the kind of analysis that the average tech person does to justify or not justify an investment.
Investing is about reading the facts, not the tea leaves. Sometimes the facts aren't enough to predict the future. See Bill Ackman trying to catch Netflix falling and exiting at a loss soon after: https://variety.com/2022/digital/news/bill-ackman-sells-netf...
Had a decade ago you bought and held the FAMNG index of companies, you would have beat pretty much every hedge fund and active manager, save for Renaissance Technologies....
I’m a fan of Intel turning it around, becoming a fab, etc. However, I would seek a lot of input on this one. It requires a lot of capital and could take a while.
For now it's just promises from a failing giant, no?
What makes you think they will suddenly be able to innovate after decade long stagnation and being beaten by AMD and NVidia? It's not like you can change company culture with simple "but now we will try". Firing most of the management and substituting them with engineers would be a first step. Until then they will fall even further behind imo.
> we anticipate growth in payroll expenses as we work down our current hiring underrun and add incremental talent to support priority areas in 2024, which we expect will further shift our workforce composition toward higher-cost technical roles.
Sounds like a company that really needed to reduce its workforce to achieve greater efficiency. It's totally not because they wanted to fire people without firing people. Nope.
Love him or hate him, Zuck keeps defying the doubters. Even as far back as the IPO he was dismissed for his youth. Meta/Facebook was dismissed as a fad or the next myspace. He knew Meta needed to be streamlined, and he achieved this.
Firing people without firing people? You are aware of the two major rounds of layoffs during the previous two years? Both of which came with extremely generous severance?
Sure but saying they were "fired without being fired" implies that the company did some kind of covert layoff through underhanded means, e.g. giving people low performance reviews in order to get them to quit, or forcing designated WFH employees to come back to the office or be fired, etc.
it's exactly what Zuckerberg said right at the start - they want more engineers and less managers / other support roles. There are fewer engineers but they cost more.
We're an 8 digit ARR DTC brand, not suprised at these results. After the apple/facebook tracking issues we took our spend down to zero as it wasn't working. Facebook has fixed their alogorithms though and full credit to them our spend is working again and they are back to getting the lion share of our spend. Full credit to them!
I started joking with a friend when it hit $300-ish a share in this recent run-up like "wow imagine if we had invested when it dropped to $100 we'd be RIIIICH!!"
Now it's up another 50% since we started joking about that so...
Realistically, I'm much more attached to slow and steady index investing but FB stock is one I always like to follow along with and I (mostly jokingly) kick myself for not having the foresight when everyone was claiming doom and gloom a year ago that "nah, there's a cockroach (in the survivalist way, not to sound insulting) here..."
Advertisers have like 2.5 places to put their money right now, and FB is one of them.
Yup. Meta's properties have near-dominance of the web, save for Google.
This is why you have to sometimes hold your nose and buy. The rational part of your brain says "it is overextended" . Yes, but a lot of great investments seem that way, like Nvidia or Microsoft.
The Metaverse losses were bad but only temporary, but the media narrative was that it would doom Meta.
Which is on top of 300% gains from 2022 lows. Those YouTube Meta obituaries were the worst possible timing ever. (Looking at you Coldfusion https://www.youtube.com/watch?v=g_i1alH5TrA )
It goes to show how just because something appears overbought does not mean it cannot keep going higher
Meta firing on all cylinders: Near-total dominance of social networking, chat, mobile ads, and now AI. Those mobile ads are so expensive, and multinationals and other large companies spending so much $ on clicks and impressions. High inflation pure top line growth. Crazy. It's hard to find a company that that is in a better position than Meta now. Maybe Nvidia.
It's one of those stocks that people love to emotionally say is "over" without quantification. And very loose analysis like "I don't use facebook.com anymore" or "metaverse VR is not good".
I personally love the cycles of discount every 3-5 years when the new outrage happens, and just look at the fundamental numbers on the business before buying a few more shares.
Btw, not sure who Coldfusion is, but looks like they got 1.7M views on that video. So however "bad" the analysis is, it sure looks like a good way for him to make money.
> It's hard to find a company that that is in a better position than Meta now.
Meta has no browser. No mobile phone OS. No big email userbase (where the valuable business stuff is sent, not the "zomg lulz cats pictures"). I think Apple, Microsoft and Google are all way better positioned than Meta.
> Near-total dominance of social networking, chat, mobile ads, and now AI.
Social networking, OK. Although LinkedIn is MS and, once again, that's where the real juicy stuff is. Mobile ads: dunno, maybe. But around me everybody has Telegram (EU here and it's not the first country in the EU where I notice that). Telegram is growing quickly: 800 MAU. AI: I know Meta just ordered a shitload of big stuff from NVidia, for billions and billions... But it seems to me OpenAI is still ahead. Is Meta even ahead of Mistral/Mixtral? (a tiny company with a mere 300 million EUR in funding).
That said I did buy Meta at around $100 when the tech crash happened. I hate Meta, but now the Zuck is working for me ; )
In all honestly, I recently launched two campaigns. One on Meta and one on Google. It's for a niche app I worked on as part of a European Project. Meta went straight up and is giving me good traffic. Google keeps refusing it saying the messaging is unclear. I've been trying for a week to update the messaging and description to make it 'clearer', and they keep rejecting it. After yesterday I gave up on Google, I have no idea what they mean and what they want.
I got banned for basically life from Google adwords after I messed up some sort of payment configuration. Literally used an expired credit card on accident/something like that. Instant ban with no communication
Same experience trying to advertise an Airbnb. Went round and round with a Google ad "support consultant" as they messed up our campaign multiple times, meanwhile happily spending hundreds and getting ROI for it on Instagram.
About a decade ago, when facebook(after IPOing at 38) came down to 20, I was in a bus speaking with a friend about buying a bit and holding it forever(like Buffet). He laughed at me. A lot of folks in the bus gave me strange looks.
So far it has been the best decision(investment wise) for me.
The only effort I did was to read their IPO prospectus and the latest 10q(at that time).
In 2011 after selling my company to Goog a salesperson from Goldman called me trying to sell me pre IPO Facebook stock. I told him I think FB is s fad, and given that he works for Goldman, they wouldn't sell it if they thought it had value.
Likely CapEx spend on GPU for AI training, similar to what all other FAANG companies are doing now (esp Microsoft and Google, along with Meta). Mark did announce a few weeks ago they would be buying 600K worth of H100-equivalent GPUs, that's a few billion in CapEx.
Facebook growing users still is easily the most mind boggling thing in tech right now to me. I was absolutely convinced it would plateau like 5 years ago but they just keep finding more people to download their app. Theyre claiming that half the world uses their apps at least once a month, hard for me to wrap my head around that.
That was when the company was rescinding previous offers and laying off newish employees -- so there aren't a whole lot who stuck around long enough to reap the rewards.
Interesting that they started a dividend. Facebook has been doing heavy buybacks for a while now. Wonder why they started a dividend instead of plowing more into buybacks. Perhaps Mark wanted some cash without selling and disliked the current interest rates? Im reading he has 350 million shares so this is a 175 mil payout for him.
Meta always likes to play the victim card about the effect of Apple's anti-tracking measures but it's ended up being a win for them. Companies have been moving to server side conversion tracking and browser fingerprinting which actually improves the ad targeting. Also it's helped build a moat that is making life harder for smaller ad players to compete.
Also Threads has been a massive score for them. It's allowed Instagram to focus on Reels to compete with TikTok and fed in a ton of new behavioural attributes. Plus ad spend amongst large brands surely must have moved to Meta after leaving Twitter/X.
It's just amazing how things have turned around for Zuck during the last year.
Meta has staged probably the biggest corporate comeback ever. $1 trillion of market value created in the past year alone. Threads is a success by targeting high-SES, high-educated demographic (sorta like Pinterest). The opposite of most social networks.
It’s almost like it is good business to not openly antagonize half your potential users. Someone understands power law networks (and someone does not…).
Exactly. If before small business would have to pay Meta $.10 to get 100 targeted people in the door, that same company now has to pay $.30 to show that same ad to enough randos that those 100 interested people get on the door.
Meta was actually being sincere when they said it would hurt small business because otherwise it makes them TON of money. Everyone just fell into the cynicism trap and didn't believe Mark.
Instagram is half-images/half-video and Threads is half-images/half-text.
And yeah all of the popular photographers were on Threads from the beginning since photo carousel support was one of the first features that was implemented.
Insta is only half video since a year because they crammed in this reel nonsense to try and out-tiktok TikTok. And fail.
I don't want a "for you" feed and I don't want reels but they keep sticking them in my face. And everyone is now posting photos as video because the algorithm favours it.
Big tech moves like crypto. This stock market volatility is absolutely insane. I wonder if we ever go back to pre-covid times when the market didn't run up and crash every 3 months.
Early in 2023, I decided to do stock picking for the first time. I thought 3 stocks were underrated - Intel, amd and meta.
But the responsible investor that I was, I put in no more than a few thousand in each.
On one hand, I'm really glad to see how well that panned out. On the other hand, really kicking myself for not having more confidence in my own intuitions.
Big percent on a low base feels like a pyrric victory.
Just listening to the chatter -- posts, new stories, etc., I was kind of expecting to see some kind of meta doom. But they are rolling in dough. It's just pumping in.
I'm pretty skeptical of their metaverse ambitions, but it doesn't seem like it's going to be tanking the company. More like a really fun diversion to pass the time while the money pours in.
Once again, It is now clear that the death of Meta Platforms Inc. was totally exaggerated and almost no-one bought the stock when it crashed to $89 when everyone was screaming that 'it was dying'.
It is just business as usual. [0][1] and up 300%+ since ignoring the widespread FUD and buying the stock at $89 - $90.
Same here. Meta staged probably the greatest corporate recovery ever. $1 trillion of market capitalization created in a single year. The metaverse losses were bad, yes, but were not going to sink the business.
While, credit is due to Zuck and his team. Much of the turnaround was due to investor pressure to shrink the headcount dramatically and take the foot off the gas for VR.
That seems extremely high for quite a boring service indeed. But it's also a global service so people in different countries may have a different experience.
Nowadays, Facebook provides no value to me. I don't like it. Still, I probably check it a few times a day when I'm procrastinating. I read the updates of the few acquaintances that still post on it. And I'm tricked into watching a few reels. A few groups are also interesting.
Ironically, I found their ads to be quite relevant. They went from boring t-shirts and gadgets to things that I could actually be interested in.
I live in the US. FB Groups have really become useful over the last 1-2 years. Very useful for connecting with local musicians, planning trips around concerts, discussing immigration related worries and making fun of soccer players. Feels like it's basically becoming an easier-to-use reddit.
Also, unrelated I've started seeing erotic content on suggested reels. These low-quality videos have hundreds of comments and millions of views. All contributing to fb usage.
Facebook has been my "Oh my god, I'm an out of touch old man" warning message.
I honestly don't understand Facebook and Instagram and the rest of their products. I don't use them and I don't know why I'd use them. I truly don't understand what people get out of them. Yet the numbers can't be denied. Over 2 billion active daily. As OP put it, it's totally incomprehensible! Well done.
I thought Facebook was really good until they moved from the plain timeline to the algorithmic feed.
It was a great way to keep track of friends in other countries. Now it's just a shit bucket of content I never asked for that I have to wade through trying to find some things actually posted by my friends.
Insta kept the old model longer but now it's also turning into a trashcan because they're copying tiktok. If i wanted TikTok i would have downloaded that.
I know it says "Facebook daily active users (DAUs)" but I'm not sure why it wouldn't include the "Family of apps", ie Facebook, Instagram, Messenger, WhatsApp, etc
I agree with all of that and I still hate Facebook.
Facebook has amazingly good engineers doing amazingly good engineering. Huge contributions to open source. Fantastic pay. Amazing job of growing junior engineers into good senior engineers.
However, the products they build still seem like they generally makes the world a worse place, and that's probably more important.
Best engineers in the world! And all that talent spent mainly trying to get people's eyeballs to look at screens for the maximum number of minutes per day...
A generation or two ago the best engineers in the world were working on the most efficient ways to kill as many people as possible as quickly as possible, so I guess this is progress.
It's refreshing to hear this, I've always been a bit confused that people look down on Meta with disdain. They are doing stellar open source work, I use their frameworks/libraries all the time, there is lots to be thankful for. In regards to 1, its notable they weren't involved in the anti-poaching lawsuit: https://www.cnet.com/tech/tech-industry/apple-google-others-...
That's not too say I'm a sycophant, just that the level hate they get seems ungrounded.
Contrast that with on the news the other night they had a clip of Zuck at a Senate hearing addressing the parents behind him that all had lost a child to suicide from social media bullying. Also during the hearing he would quote about how there isn't conclusive causal with social media use in kids causing mental health issues.
$134 Billion in revenue in 2023. They can pay off anyone, legally via lobbying, and subvert any studies or content from gaining traction on their platforms that would hurt their bottom line.
In Oct 2022, I was jumping up and down saying “the P/E is 9!” People just hating on Zuckerberg.
https://news.ycombinator.com/item?id=33366322