Meta Platforms, Inc. (META): A Bull Case Theory

Core Thesis - Meta Platforms, Inc. is viewed positively due to strong Q3 performance and potential for future growth despite current challenges [1][7]. Financial Performance - Meta reported Q3 revenue of $51.2 billion, surpassing estimates of $49.6 billion, reflecting a 26% year-over-year increase, the fastest growth since 2021 outside the pandemic [2]. - The company added $10.7 billion in revenue year-over-year, with operating income rising 18% to $20.5 billion [3]. - Earnings per share fell to $1.05 due to a $16 billion one-time tax charge, but adjusted EPS would have been $7.25, exceeding estimates [3]. Market Concerns - Despite strong fundamentals, Meta's market cap declined by over $200 billion due to concerns regarding Reality Labs, legal and regulatory risks, and rising capital expenditures [4]. - Reality Labs continues to incur losses of approximately $4 billion per quarter, although recent developments in smart glasses and wristbands show promise [4]. - Regulatory pressures, particularly in the EU and potential U.S. trials, present uncertainties but are not expected to significantly impact the core advertising business [5]. Capital Expenditures and Strategy - Concerns about higher capital expenditures and lower margins contributed to the stock sell-off, but Meta benefits from economies of scale in AI infrastructure [6]. - The company plans to issue $25 billion in bonds to fund capital growth, supported by strong cash flows and asset base [6]. Investment Outlook - Meta is considered a compelling investment with multiple upside scenarios, including disciplined R&D management and a focus on its core Family of Apps [7]. - Aggressive investments in AI and Reality Labs could further enhance long-term growth, positioning the stock for significant upside despite near-term volatility [7]. - The bullish thesis remains consistent with previous analyses highlighting strong revenue growth and robust ad engagement [8].