When the stock was trading below $US500 in early July, we wrote, “We can see META making fresh all-time highs in the coming months, but we wouldn’t be chasing such a move.” This stance hasn’t changed, and we won’t be chasing the stock above $US500. Yesterday, CEO Mark Zuckerburg announced that the Biden administration “pressured” Facebook parent Meta to “censor” content related to COVID-19; this could be the first salvo as politicians increasingly question the size and influence of the largely unregulated social media space. Such uncertainty is never good news for stock prices.
However, for now, META is outperforming many of its peers in the AI fight. The company’s massive spending on artificial intelligence is already paying off, and as Zuckerberg said “Look to the present”:
- In July, Meta reported revenue growth of 22% from a year earlier to $39.07 billion, with 98% of its sales coming from advertising, primarily on Facebook and Instagram. Its growth rate was double that of Google’s ad business.
- We can see Meta broadly range trading into Christmas and potentially beyond.
MM is neutral META, and not a great fan of the business
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