Meta是强力买入；诉讼解决和540美元的技术支撑创造了低风险入场点，而潜在的计算货币化提供了可观的上涨空间。

Let's go take a look at what another suit says on Meta. This time, Meta Stock has underperformed in recent months. Compelling riskreward. I agree with that with a focus on increased AI clarity coming.

news driven overhang specifically we highlight two key developments continued questions around capex and the emergence of lawsuits on the latter point so this was written you know a couple days ago uh the announcement on the settlement agreement regarding one of the major lawsuits facing Meta while financially meaningful should reduce some of the overhang and negativity basically around uh the stock the uncertainty. I agree with that.

Meta also has I think has quite a bit of upside in it. Let me see what the stock tab has for Meta. Meta's sitting at 1071 right now on the stack stock tab for forecast fair value.

Overall, youth focused legislation and litigation globally has in our view represented a significant overhang and has been the largest nonfunddamental risks. Yeah, I agree about the potential liability, right?

Okay. Meta committing to make various changes to its family of apps platform offerings for underage users, including a 2hour daily time limit, default access to night mode, notification limitations, blah blah blah. Okay. Meta committed to several back-end operational changes. None of that really matters.

Just see what their forecast is here. In our view, the removal of this overhang may allow investors to refocus on operating fundamentals and AI execution. We remain optimistic around Meta's broader AI strategy across consumers, enterprises, SMBs, and internal use cases and believe their competitive positioning and monetization opportunities underappreciated at current levels.

While most of these initiatives specifically around categories one and two below are fully launched and scaled enough to a level that can be analyzed or modeled uh we see these initiatives as collectively having the potential to drive sustained revenue growth over a multi-year view. Yeah. Beyond uh beyond what is factored into the Goldman Sachs and streets estimates.

Specifically, let's see here. So, this is on AI execution, scaled enough model, blah blah blah. Okay. New consumer and enterprise products. In recent months, Meta has made a sizable number of new AI related product and strategy announcements. New AI related and product strategy announcement, which we outlined more in detail. We specifically highlight potential products or services that facilitate aentic AI behavior inside of adjacent to core platforms, i.e. unlocking more widespread adoption. and utility for consumers and SMBs. Yeah, I mean you can get small businesses to go advertise their businesses more big dollars there. Probably not wrong by Goldman here.

and then meta we're just now talking about up about 1.2

Then let me see here what else with meta meta meta meta that's here. So basically big overhang gone because of the lawsuits. Then we get into utility for small businesses. Business in a box offering holistic operating center layer for SMBs that leverages the company's deep embedded commercial relationship with businesses and creators globally to help facilitate a broader suite of automated services. Oh, that's smart. Advertising, marketing, customer support, content creation, agentic commerce. Wow. I mean, yeah, think about that. You can advertise on the plat. Yeah, let's let's write down some of that thesis there. That's intriguing to say the least.

So, let's see. Let's write an extra page here. Okay. Uh, business in a box is interesting. Uh, theoretically, theoretically you could say, "Hey, I want I want to run ads. I want content created." Right? That could be done with uh that's the base case for meta, right? I want content created linked to creators. That'd be a new vertical. uh those creators can get paid, which is a creator economy, right? That would essentially be newish. That's sort of direct linking. Uh and then you would have agentic customer service. That would be newish sort of built in for those uh advertisers or companies. Marketing, customer support, content, and aentic commerce. Yeah. And then obviously, you know, design services, design services by AI, which would also be newish for meta. That's kind of interesting. If you put all that together, that's those are things that I mean, they could basically go to an entrepreneur and pitch all that, you know. So, um, an entrepreneur gets pitched this uh somewhat desirable for a new business.

Direct external enterprise monetization of cloud or uh compute capacity management public commentary on Q2 points to potential to lice out excess compute to third parties as direct neocloud type agreements. Below we frame more details on our view, what forms this might take, strategic rationale for doing so, the potential revenue contribution in 2027 should Meta go this route. Okay. Below we frame more details on our view, what forms this might take, the strategic rationale for doing so, and the potential revenue contribution. Okay, I mean that's not too valuable. So broadly, we see the potential to externally monetize available compute as an upside optionality undervalued at current levels, right, to rent out all that extra compute they have as a way for Meta to capitalize on the current supply and demand imbalance. Well, that's what they hinted. They did hint that uh you know, Zuck Zuck hinted that if uh they'd get paid a ridiculous amount uh they take it for compute. I'm pretty sure that was in the earnings call, but it may have been at a team event that they did because there was an earnings call and then there was a a sort of team event.

I'm going to pull it up and I'll find out in just a moment here. Uh, okay. So, let's uh any commentary on licensing compute if opportune? Pop that in. I've got my old sheet here. I just don't know. No, they didn't comment on licensing in the last one. So, that means it was the team event. Dang it. Uh, that transcript. See if I have it. Meta meta meta meta meta meta meta meta meta meta. No. Okay. Well, I'll find it. Meta Zuckerberg call opportunistically rent uh excess data center compute. Barons actually has a piece on this four weeks ago. That's interesting. Conference call in May. Okay, here we go. Okay. Oh, come on. There we go. Facebook. The plan is to rent out uh MetaMP compute initiative. The company aims to plan a business segment that sells both access to pure computing and various models. The Bloomberg report. Uh let's see here. Meta didn't comment. Bloomberg sites anomous. Okay. on a conference call in May that the group is considering renting out capacity. Almost every week there are different companies that come to us asking us to stand up an API service or we have compute they could buy at some premium we bought it at. We haven't done it yet because we think we have a use for the compute. However, if the situation uh changes, the option is on the table. Yeah, I mean that's that's what it was. And I guess Barons is now harping on this too.

Meta plans to make between 130 to 140 billion in capex this year but has resisted setting up a cloud rental business. Meta's core advertising business is enabling the massive investments. Right. And I think their advertising business will keep growing. But Barren argues that Meta needs to rent out some of its data capacity if it wants a positive return on investment intell uh artificial intelligence. Okay. The firm updated its forecast for Meta, estimating that returns sit negative basically unless they rent out these data centers. The company is deploying some of that for their AI models, some of it for improving the advertising energy and release engine and releasing consumer and enterprise products, but it has resisted setting up a cloud business. We're getting a lot of offers a significant Okay, well there it is, too. Um, maybe it wasn't the earnest call. I just did see offers a significant premium. Let me see. Maybe it was premium. I don't think it was this earnings call, but it doesn't matter because that was April. Oh, cuz that's the April earnings call. That might be why I was looking at the uh the old earnings call. So Meta that was probably in their recent earnings call. Okay, fine then. Doesn't really matter where it is. We got it.

Investors are itching for Meta to take on some of the deals. Let's see. They believe that Zuckerberg will acquies. We think there will be cloud revenue this year and it will be a catalyst for the shares. See, that's interesting because now you look and you go, hey, there's there's a potential stock opportunity. It's uh it's cheap and it's in the penalty box. Meta's core advertising business is enabling the massive investments. Return on invested capital is negative. Meta's also several revenue streams in development that may quell capital spending fears in that sense, keeping the options open. If Meta can boost ad performance more, blah blah blah. They reiterated a $700 price target. I actually think that's a little bit on the low side, but this is interesting. So, it's sort of like a catalyst for Meta Stock.

Back to the Goldman piece here. Core advertising. That's neat. Okay. We currently forecast Meta's advertising revenue to grow 27% in 26 and 20 and 21% in 27. So, it is slowing. both of which have been revised upwards. Though that's about 18 to 28% above our prior estimates, notably above industry growth levels. While debates will persist about OPEX capex, we think such a rate of change in the company's core advertising revenue growth is a proof point of return on investment capital. In plain sight, in our view, the biggest detriment of stock performance from here is whether a product launches, AI revenue streams, and advertising improvement arrive quickly enough. If management continue can continue to demonstrate monetization while providing long-term visibility into economics, the stock's primary valuation discount could narrow materially. Yeah. I mean, so you at least you've got a lot of suits talking about it.

Uh let's see here. Oh, okay. All right. Got it. So, then we have functional models in the coming weeks. Well, because they also are competing in these lowerc cost models. Let's take a look at that because we've got meta meta openweight models. You know, Zuck had his whole like multi,000piece pitch and then on Lauren's birthday, they introduced Muse Glimmer.

All right, let's uh let's write this down on meta just a little bit. So meta right now you've got uh Barons and Goldman. Barons is talking about it via so this is actually who New Street Research New Street Research via Barons and Goldman argue meta undervalued opportunities uh if they monetize compute the discount in shares may evaporate quickly.

Uh the suits sound bullish. Uh you know I I think the stock has a double in it. Okay. Uh they hold also worth noting end of 2025 uh they hold 7 gawatts of compute uh and that's planned to double uh that's expected to double to 14 gawatt by end of 2027

which actually is very interesting if you think about it that's what Elon uh wants for SpaceX uh 10 gawatts of compute.

He's underwriting at 30 to $50 a gigawatt. Meta isn't even underwriting at all. Uh Meta doesn't appear to be underwriting at all. Screw underwriting. But I mean that could be an upside if if people aren't uh you know talking about it.

So then we have Sherish search by address uh or a map feature. Yeah, I agree with that. Yeah, I'll make a note on that right now. So Meta's own capacity is projected to average 13.5 gawatts by 2027. Power capacity restraints suggest four to five coming online per year.

Uh Meta has entered into agreements totaling over six gawatts of power. Interesting. So over the next 10 years over the next 10 years uh potentially as much uh as 23 of compute power may come from Olo and Terra power. That's an interesting note.

H as far as the business's side, let's see. Compute monetization portfolio strategy raw compute. They might consider they're considering selling surplus capacity. They think they could generate 15 to 36 billion in incremental cloud revenue if they sell excess capacity. That's from Deutsche Bank.

So that's interesting. So DB thinks they could generate 15 to 36 billion of extra uh revenue if they monetize compute. Let me see what how that compares then. So if I go here, yeah, I mean their revenue in fairness is expected to be $254 billion. That's freaking crazy. 254 billion revenue expected year end 2026. So that would add 15 divided by 254 be about call it 6%. And then next uh if it's up to 36 that would be 254 6 to 14%. to revenue.

Okay, interesting. Then we've got a note over 1 million businesses are using Meta Business agents. Meta began charging subscriptions with volume- based token pricing just now, just recently.

So as far as business on business side 1 million businesses use Meta business agents for WhatsApp and Messenger.

Then you've got subscriptions uh based on tokens started being charged in H226. I actually think of I'm pretty sure pretty sure six rental car uses this and it's great when traveling. Uh you can chat with their reservation bot quickly and and then you know get escalated to a human if you need to pretty quickly but it just it makes it easy to sort of text the support if you will.

selling APIs could generate over 65 billion per barlays. Barclays. Let's see here. Barclays thinks over 65 billion possible via APIs. Meta remains the only hyperscaler without an external monetization. um plan or whatever you want to call it. Wow, that's interesting. Is the only hyperscaler without an external cloud uh monetization plan

Internal internal workloads are taking a top priority. Interesting tank there on Meta.

So, first thing I want to do is a little sumsome on meta just because we're getting so much coverage uh on meta and I think it's worth going through. And once we have their earnings, let's see here, then we'll be good to go on how this one could be a buy the dip opportunity.

Yeah, we do have spending went up a bit wild this quarter. And that's that's exactly what's holding the stock back in my opinion.

Should you buy Meta Stock or stay away? There's something unique going on with this stock. It is obviously one of our massive hyperscalers. It is the only hyperscaler that does not rent compute.

But if they change their mind on that, would it be worth buying? Is there a chance they're going to change their mind? First, via Barons. We have an argument from New Street Research that if Meta rented out some of its extra data center compute, they would end up having a positive return on investment on their uh AI capex spend.

Right now, without them renting out their compute, they sit at return on invested capital estimates of negative 2.2%. Not good. This is seen as a big overhang on the stock. Uh and so obviously when Zuck in the uh in a conference call last month said that hey we're getting a lot of offers for compute at a significant premium over what we paid which is probably the likes of like an anthropic or open AAI who really don't care right now how much they're spending they're just trying to attract users that's obviously not sustainable but if we're in a shortage or scarcity mindset and open AI and anthropic want to be drunk sellers sailor so to speak and blow a bunch of money let them why not stand there and monetize.

Meta already has about 6 gawatt, and they're trying to get to 10. So technically, Meta could flip the switch and be about four times the size of SpaceX's current compute now and monetize on that scarcity now.

So Meta is not advertising that they can monetize on that scarcity even though they have it. Elon doesn't really have it and is pitching monetizing on that scarcity. This is why people think Meta might be trading for a discount and that that could change really rapidly if they actually came out and flipped the script.

In fact, they say that Zuckerberg will end up acquiescing. They say, "We think there will be cloud revenue this year and it will be a catalyst for the shares."

Uh, but actually looking at Meta Catalyst, it's not just New Street that suggests this. It's also Deutsche Bank. So, let's jump into the um well, it's not just Deutsche Bank either. It's also Goldman Sachs.

Goldman Sachs argues the following that there is a quote compelling riskreward with a focused on increased AI clarity in the coming months if Meta can start monetizing their compute. First, there's a whole section about how great it is that they settled this lawsuit because there was talk about how the lawsuit could potentially end up costing $1.4 trillion in fees. At least that was the kind of crap that was advertised in PR, which probably helped kind of wrestle them into a settlement in the low, you know, 5ish billion range. Still a lot of money, but it's certainly not $1.4 trillion.

They say that removes a big overhang over the stock. Uh, and some of these limits like a time limit for children or notifications off during night hours or parental supervision options, uh, age limits and verifications that these things aren't really that big of a deal and they actually remove more of a negative catalyst from the stock than you end up losing by having those limitations.

On the flip side though, Goldman Sachs thinks that refocusing on operating fundamentals and AI execution is where you can really make the money.

Deutsche Bank agrees with this, by the way. So, Deutsche Bank argues that Facebook Meta could generate 15 to 36 billion of extra revenue if they decided to monetize their compute right now.

Now, keep in mind that's actually not that much relative to their total revenue. They're expected to make a quarter of a trillion at the end of 2026. Like, think about that for a moment. A quarter of a trillion dollar of revenue, $254 billion of revenue by the end of 2026.

So, generating an extra 15 to 36 billion by monetizing some compute. I mean, that would be what, maybe a gigawatt or two, hopefully less, you know, for the purposes of the whole AI industry. Uh otherwise if you do 2 gigawatts at those prices starts getting a little cheap per gigawatt. But anyway that adds about 6 to 14% on revenue. That's not really the biggest driver.

Instead, Goldman Sachs thinks that plus monetizing some of the other tools they're coming out with could really be the revenue drivers because Meta and Zuck could basically come out and say, "Look, we're providing businesses a business in a box. We're providing ways for other people to monetize which enables them to pay us more money."

And I think that's the thesis here with Zuck, at least per Goldman Sachs. Goldman Sachs suggests that a business in a box and and I put some of these things in here, but could potentially be, hey, I want to run a business. I want to be an entrepreneur. I want to run ads. Boom. Base case for meta. I want content created. No problem. We'll design it for

where you know now more SpaceX stuff comes online, Google stuff comes online, Microsoft, Amazon, Meta, the NeoClouds, the Iron, the NBIS, the coreweave whatever a lot of money going into this right

uh and Zuck has kind of been hinting at this. He said in a meeting with uh in a conference call with um uh uh employees that sometimes they get offered ridiculous premiums to open up API services and that you maybe they should really take advantage of of doing that. So they think that if management continues to demonstrate monetization while providing greater visibility into long-term AI economics, the stock's primary valuation discount could narrow materially.

when you look at Meta, I personally think there's some compelling components to it. I believe that the stock has a fair value of around $1,300. My stock AI product thinks Meta has a fair value of $1,071. So somewhere in that range suggests that the stock has like a two or 2 and 1/2x built into it and maybe not that far off.

Now when we look at the actual fundies, the real fundamentals for the company, we can see where there is some concern. Spending did go up a little bit in this quarter compared to prior quarters. We went a little girls gone wild here. We got cost of goods sold up 33% which shrunk their PP their pricing power. R&D and SGAA SGNA nearly doubled. How? Why? Why did uh maybe not the S part but the GNA? Why did GNA double and R&D double? The sales portion actually only went up about 15%. So less than revenue, which is good, but they're plowing more money into R&D and they're plowing more money into uh their administrative expenses and their cost of goods sold went up more than the revenue growth that they have. All of those things kind of weakened some of their appearance of pricing power and they set up an opportunity for Mark Zuckerberg to turn that crap around.

We're not seeing repurchases. We're not seeing dividends. We got $25 billion in debt, which is less than Salesforce has. Uh their stock comp rose about 52%, their net income's up 22%. They've got free cash flow about $15 billion in a six-month period. That works out to about 30 in uh an annual period, but that's down from where it has been previously. And unfortunately, markets think it's going to keep going down. If they do it stay at 30 for the year divided by their current market cap of 1470, it's about a 2% free cash flow yield.

So it's nowhere near as juicy as like uh Salesforce at a 7% free cash flow yield, but it's still better than the cyber security plays. It's still better than Palunteer.

So a lot of people think there's a real opportunity in MetaT. If you look at their balance sheet, it's not as indebted as some other companies. They've actually got cash marketables and receivables of 112 billion minus their bills of 56. That gives me free cash uh of 56 and they have long-term debts of about 83. I could pay most of that off with the extra 56 in free cash I have and one year of cash flow because that'd be an extra 27 billion of long-term debts and obviously the long-term leases that they have of another 26. Yeah, some people are a little worried about that regarding al balance sheet risk and that's exactly why the monetization of artificial intelligence could be really useful for them if they pivot in the strategy.

Of course, that's allopium. you know, just because Deutsche Bank thinks they should do it and New Street Research thinks they should do it and Goldman thinks they should do it, doesn't mean that they're going to do it. And if they don't and they decide, you know what, we're going to keep using this to build out more subscription-based services on tokens, which now they're charging for like token usage on WhatsApp.

I went on vacation to Europe and and this one of the reasons why when I go on vacation, I really like studying companies. What I notice is I go rent a car with like six rental car. I'll get a message on WhatsApp because everybody in Europe uses WhatsApp apparently. Uh and and they're like, "Hey, your rental car is ready or this that or whatever. Message us here if you have questions." And 90% of it is just their chatbot replying, but you could ask for a human, too. I'm like, "All right, all right. This is this is actually really functional. I don't have to call a stupid number or wait on hold. I get a pretty rapid experience with the chatbot and, you know, not that long of a wait if I wait for a human." And it's all through WhatsApp, which Facebook can monetize.

And keeping in mind that they're the only hyperscaler without a monetization plan on their capex right now does set them up for a rapid turnaround post lawsuits getting settled and coming up with some kind of capex plan for monetization.

You know, Meta did say that their guidance remains unchanged after these lawsuits. Uh the, you know, judge obviously still has to sign off on the settlement. uh to really complete the settlement, you need Tik Tok and YouTube to really join.

But when we look at the valuation of the company, I mean, there are various different ways you could value it depending on what kind of peg ratio you want to use. If you take a, you know, 24 peg, you're at about $1270. If you take a 21-1 peg, you could get to $1,100. But we've got 15% growth forecast uh for the company with uh you know, substantial amount of EPS for the end of next year. This is all pretty impressive. So, the company seems cheap on a technical base.

Obviously, full disclosure, exposed to it. On a technical basis, it also feels like you should enjoy the fact that there is what I call a legendary support line at $540. So, 577 divided by 540, I am 6.8% away from what I call a legendary support line. Those are the strongest technical support lines that I ever have. And we've got here in the last 6 months a bounce in March, a bounce in June, a bounce in July, and a bounce in August at 540. While the lawsuits are gone going on, now the lawsuits are gone, and we're only six, well, the biggest ones from the states. We're only 6.8% above that support line. This is setting up for a massive breakout and we've got this downtrending uh well, this sort of converging trend. I wouldn't necessarily call it I mean this is a downtrend but this is a convergence right here. So maybe it's possible it goes lower. I personally think our floor is that 540 level. Poop hits the fan. We go into a recession. All bets are off obviously. But this is a nice technical level that could really set up for a bounce. You've got fundamentals on your side. You've got optionality on your side. You've got uh the legendary support line on your side of 540. And uh in my opinion, that's a great opportunity to break up through this convergence.