市场对Meta资本开支的过度反应，在核心广告业务强劲的背景下，以13.5倍EBITDA买入创造了机会。

Um, we discussed Microsoft. Meta's beat. Meta had $60 billion of revenue in the quarter, up 28% year-over-year. That is a huge beat. Um, $6.18 earnings, missed earnings, down pre-market. I said that sounded like a shame to me.

Uh, let's see. Revenue for Meta E. So revenue was beat. We discussed EPS missed by 14 and a.5% and net income fell 14% year-over-year. Um the cash flow free cash flow this is saying this this recap cash flow collapsed to 784 million against $ 31 billion of quarterly capex. Okay, I don't like how Colott is phrasing that free cash flow collapsed to 784 billion against 31 billion. It means they spent a lot of money in capex is what that means. That's near zero cash generation for the company. Fullyear guidance for capex is 160 to $145 billion.

Let's go take a look at Meta and their free cash flow. Um, let's pull up some charts. So, first of all, just out of the gate, revenue continues to move materially higher every year for Meta. Okay. As does earnings, both of those, and free cash flow. Yes, capex is growing. And you can see, it's going to be hard to see on this chart, but you can see the difference between um operating cash flow and capex. The delta, the spread there is narrowing in this chart. The distance between the blue and the purple, right? It's it's squeezing. That means there's less free cash flow. Correct? In however, if that capex is invested properly, then Meta's revenue and earnings growth should accelerate.

So you have to kind of trust the business here is do you believe Meta has proper opportunities to be able to invest money at a high high ROI? If you believe that's the case, then buy the stock because they're they're betting hugely.

you know it it it stops like these guys are still they just soaked up all their cash. What is this net debt? They borrowed a little bit of money uh last quarter. Interesting. So, they are spending more cash on capex than they're generating in cash, but they were debtree and had a ton of cash balance to begin with. So, they can definitely afford it. They're basically paying cash for what they want to do.

And if you missed my other rant in one of the other live streams, my point about this capex chase is this. Take a look at Meta and their write down of um the metaverse. They spent years building out something that failed and they wrote it down. Fine. That happens in business. A, you want them betting their cash on areas that they believe are large market opportunities. That's their job. That's why you're investing with them. You're giving them money. They are in turn investing that cash to try to grow and grow your stock. So, you want them placing educated bets on where they think they're going to grow. Are they going to hit home runs? 100% of the time, no. every business um certainly once they're trying a lot of opportunities will find some and fail. Uh Zuckerberg probably could have done a little less of a spend in the metaverse and tested it a bit more but you know they are kind of a big betting kind of company. So the point here is they bet big lost stopped wrote it down laid all the people off and are pivoting and that's what you want to see. Hopefully this bet pans out. But again, if it doesn't, they'll shut it down. They'll write it off and they'll invest something else because the core business still generates a tremendous amount of cash flow. And if everyone's worried about the capex and that's why this stock is down, in theory, if they stop the capex, the stock would rebound. So that's one alternative. If the if the cap if the capex investments fail to yield return and they stop it, the stock would rebound. The other alternative is if the investments are good and solid and produce accelerated revenue and earnings growth, the stock will go up even higher.

Yeah, it's fair. I mean, this those losses will help offset the profitable ad business. You're you're absolutely right. You want them taking bets in the market. And it's our opportunity, our job as rational investors, value seekers, whatever you want to call us, to look down the road a little bit, and understand the earnings power of this business, which is the ad ad platform. And if they if if they don't succeed with Capex, fine, turn it off. the ad money still flows back. You got a great business got essentially no debt on it and it's still growing very quickly. So I think the market's overreacting to this.

Let's see what the valuations currently for Meta. Meta's 13 times EBITDA. Wow. That that that seems cheap to me. I haven't done like a full cash flow analysis of it, but let's see. And it's years. So, it's currently at what I say 13 times. Shoot, I forgot. Yeah, 13 and a half. Okay, so it's currently trading at 13 and a half. If I look at just fiscal years, when is it traded that low? December of 22, it got super cheap. December of 18, it got cheap. That's it. Last decade. Last decade. This is the third cheapest you can buy it in the last decade. So, it looks like every couple years, every every um you know, four years, let's say, you get an opportunity to buy this stock cheaply. This might be an opportunity because think about it, if it if it ends up panning out that this money is yielding above average IRS, you're not going to be able to get in the stock again for another couple years as people want to dive in. So, I think that's an interesting opportunity.

People think of Facebook automatically uh you know Tik Tok, Instagram. Well, Instagram is Facebook.

putting it into a direct competition with Meta and Guru.

Facebook takes a lot of that money simply on the assumption that well they're coming from Facebook because I'm giving the mo majority of my money to Facebook and the majority of my customers so therefore they should come there. It's it's a little bit of a guess, but if you can integrate with Shopify, then that means that Shopify can tell you, hey, this person clicked on a link in Reddit. They went to the Shopify page that linked to Reddit. They bought something. So, you can directly tie a purchase to the click that was on Reddit. Facebook can do that.