Fahad Saleem
3 min read
In This Article:
Jeffrey Small from Arbor Financial recently said during a program on Schwab Network that Meta Platforms should be a key part of investors' portfolios. Here is how he explained his bull case for the social media giant:
"I like Meta Platforms Inc (NASDAQ:META) for the same storyline of their fundamentals. Their fundamentals are very strong. Three and a half billion people on the planet. They're incorporating AI in all of their platforms. They're mastering that. They're going to monetize that. And I think you've got to make that a core portion of your portfolio going forward because of the fundamental side of the picture. And so that's really what draws me to them besides the fact that they are really slightly underpriced compared to most of the MAG 7 stocks."
Photo by Timothy Hales Bennett on Unsplash
Meta Platforms Inc (NASDAQ:META) biggest strength remains its huge user base, which continues to grow despite record levels. The company has 3.43 billion monthly active users as of March, up 6% year over year. This equals about half of the world's total population, giving the company immense power for monetization and data processing. The company also raised its capex guide for the year from $60-$65 billion to $64-$72 billion, crushing concerns about an AI and data center slowdown.
Another overlooked element in Meta Platforms Inc (NASDAQ:META) business is its ads growth. The company, which depends on advertising for 98% of its revenue, is growing at a rate of 21% YoY. In comparison, Google Search grew by 9%, while Alphabet's overall business, including Cloud and Services, expanded by 12%. Even YouTube's year-on-year growth stands at 11%, well below Meta Platforms Inc (NASDAQ:META) rate.
Given Meta Platforms Inc (NASDAQ:META) current growth, Wall Street's estimates of 21% EBIT growth and 18% OCF growth seem conservative compared to the tailwinds the company is benefiting from right now.
Nightview Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q4 2024 investor letter:
“Core Opportunity: Meta Platforms, Inc.’s (NASDAQ:META) platforms—Instagram, Facebook, WhatsApp, and Messenger—reach nearly half the world’s population daily, making it one of the most powerful advertising ecosystems globally. With investments in AI and augmented reality (AR), we believe Meta is also creating significant optionality for long-term growth.
