Meta是B级投资；因资本开支不分散和表外负债而面临高风险，但强劲的广告业务和合理的估值提供支撑。

we will look at Meta again which is a episode that we actually just recorded

Um but I mean I'm biased myself like for example you look at Meta pretty um pretty critically in terms of its uh um its influence on especially kids, teens and people in general. Um, well, I use meta primarily to look at the ads and I always think they're great and I get stuff and I feel like I'm personally biased because I like to use it and I don't feel like I scroll a lot.

>> First of all, anybody who hasn't heard that before didn't listen to our episode. So, uh, it's their own. I'm just joking. Um, so basically we're joking all the time because when I go on Instagram, um, by now I actually primarily use it because I feel like the ads are so good, they're so targeted that I don't want to look at all the content that they have, but I primarily feel like, okay, I just feel there's a need for something in my life. I don't know exactly what it is and then I go on Instagram, um, I go through the ads and then I just find stuff. So, I mean, just recently, I think we we talked about it in the episode we just recorded. Um, I I sort of had the idea of like wanting to play wanting to play golf with my family. Um, it was just loosely in my mind, and don't ask me how, but suddenly there was an ad on Instagram um for playing golf with your family and like a special offer just nearby and I just did it. Um, whenever I buy other stuff, so often I just go to Instagram and to their ads and I feel like they've not only become more targeted, but also higher quality. I think 10 years ago and and potentially five years ago, a lot of the stuff that was advertised on Meta was more or less crap. Like it was low quality, it wasn't good. Um I feel like that shifted. The other part still exists. Um but I do feel like um there has a shift, but that's sort of me and Europe and whole argument of like that's not how most people use Instagram. Most people just go on reals and then they get lost for like 40 minutes. And and that's sort of the strategically addicting dynamic that Meta has.

Meta is a company for example that we just also did an episode about. Um, I feel like there's so much to cover that I don't even know where to start. Um, we could talk about lawsuits, we could talk about super intelligence, we could talk about the cloud computing.

kind of what meta did in 2022 when you know the metaverse investments didn't work out and then they said okay well 2023 is going to be the year of efficiency and then just save a lot of money um you have your high margin um ads business and it doesn't look like that will happen now.

Um I think one of the most important things to look at for meta and we talked about it in the podcast is always to see how ads are performing. Obviously the best thing for Meta would be if both ad prices and impressions grow at the same time. This happened in Q1 of this year.

So I feel like that was the time um even if we put up the stock here when the market was quite excited about Meta where they pushed the stock I think was up about um it was up over 7 $700 per share that 750 actually 770.

Um so we're down by now stock actually moved 3% up today. So, uh, it's a small recovery here, but, um, we're we're down quite a lot from the 770.

And this was basically at a time, um, where the market was still thinking all the capex would go into better ad algorithms. And, you know, they are probably the number one maximum company who can monetize um, the core business through meta or through the uh, AI spend.

But now you talk about a cloud business where Zuckerberg is basically saying you know if there's any excess compute we buy too much compute we'll just sell it because demand is so high we can get good prices on it have a good margin.

Um but it's kind of difficult because he talks about so many things. He talks about having a cloud business then you basically go up against Amazon you go up against Google you go up against Microsoft. Um there's no enterprise connection to the same extent that Meta has compared to those companies.

So, you probably have to go through the hundreds of millions of small and medium-sized businesses that are already on on Meta advertising on Instagram and on Facebook. Um, and I think that's that's basically where the power of Meta is that everything that you drop you can distribute to three billion consumers, hundreds of millions of small businesses,

Um, which is close to as good as the frontier models. Um so now you have this ecosystem where you have a good LLM which Meta has struggled with for a long time. Um you have the distribution both to small and medium businesses but also to the consumer and now you can just drop a lot of new tools. I mean they just dropped uh um what they call seller which is a marketplace on Facebook. um they have what you could probably call an ad agency um where they basically give these small businesses the opportunity to use Museark their LLM to come up with ad campaigns have these ad campaigns obviously on Facebook and Meta or Instagram

um and I feel there's a huge ecosystem um that can make sense for Meta to monetize but they focus on everything um they want to go into enterprise where a lot of that capex is actually going to because it's compute and they also want to have super intelligence which is basically the vision of Mark Zuckerberg to say that everybody should have um a personalized AI agent and which better company is there than matter to again distribute that to three billion people.

Um but it all is it's so much like you don't know where the focus is. You don't know what they will actually um especially with you know compute um having too little compute where will you focus it?

Um and I think that's what makes the market nervous where they're just like you want to do so many things um and we don't have a good track record or meta doesn't have it in terms of doing things outside of the ad engine um that it's quite difficult for the market to follow and think or at least getting excited about what Meta is doing.

Um that's sort of the jumping around tangent on like the bull and the bare side of meta huge distribution. um they now have the AI talent. They just built a huge LM which is successful close to the frontier model, but then there's so many things that they do that they you just feel like you don't know what they should focus on.

>> Yeah. I I uh I have big questions around Meta's capex. Uh to me, it's a lot less defensible than uh what Alphabet and Amazon are doing.

which is why I say they're sort of hurling themselves off a cliff with this bet because uh before it didn't seem like you know you there were no existential threats on the horizon that would kill Meta or Alphabet or Amazon like you know you could debate whether they were going to you know compound at 10 or 15% a year for the next five years but it wasn't like these businesses were were fundamentally at risk.

um when you're talking about a you know for Meta they have $700 billion in offbalance sheet liabilities over the next couple years um you know and then you layer in some of the regulatory stuff like we're talking about near existential risk like it's a little I'm exaggerating a little bit like my base

I think that these part people are a lot smarter than me and you know everybody in Meta and Alphabet and Amazon hasn't just like collectively lost their minds. I think there's something very real that they see and are investing in.

Um, and like I said, I think Meta is the least defensible. With Meta, it just feels entirely speculative. Like, uh, Meta is at its core just an advertising business. They've never really diversified beyond that.

Um, and I think there's kind of some personal reasons that he talked about in the episode that met or that Zuckerberg feels like he needs to to make Meta into to something more than that, even though it it really doesn't have to be more than that if you're if you're thinking strictly about maximizing shareholder value.

Um, so yeah, I, you know, following the metaverse and then looking at the allocations of capital they're making based on their actual position as a hyperscaler. you can even call them that compared to, you know, Alphabet and Amazon. Um, yeah, I just don't feel good about it.

I I I mean, the ad business is so good that I couldn't write off uh owning Meta, but for me, it's like maybe a B at best, B to C is sort of where I land.

I mean, I do own shares in my personal account and um maybe just to to this question, why would you buy Meta today versus, you know, waiting until the AI bubble corrects?

Um so I think by that logic you would need to sell all of those. I don't fully agree with it although I do agree that there are risks um and they are larger for a company like me because they're not as diversified which you you kind of alluded to it.

It's sort of why Zuckerberg wants to do what he wants to do because he realizes that it's not a diversified diversified company. it is quite concentrated and that's basically two decades after founding Facebook.

Um I think that's why he's constantly going for this um this idea of creating a platform which didn't work out in the past with this capex and that's what changed now you need it to work out because it's just so much money that he invests.

Um I think there are a lot of things um again we talked about it in the episode that also bullish um especially for the ads business. Um, we sort of talked about this vision of um, AI just in a photo pointing out to, for example, if you wear a t-shirt that people like you can just ask AI, hey, where's the t-shirt from, right? It basically turns every single piece of content into an ad. Um, which which is huge if you are basically the biggest aggregator of advertising in the entire world and by now Meta is the biggest advertising business in the world.

which which is huge if you are basically the biggest aggregator of advertising in the entire world and by now Meta is the biggest advertising business in the world. So, I think there's a lot to get excited about. I think there are a lot more risks than probably ever for this company.

Um, but if you're fine, I think for you it's the highest possible one. With B, I think I would also put it in B. Um, I think it's not expensive. Again, if you look at the numbers, um, technically you can also debate what metric to use. price to operating cash flow is about 12.

I wouldn't just look at the metrics by now. Um because obviously you mentioned all the the offbalance sheet debt. Um it it's too simplified if you just look at the metrics, but still um this is currently valued as a company that's kind of below the average of the S&P 500.

I don't think that looking 10 years out um Meta will not have performed better than the average 500 S&P 500 company.

looking at the other companies here, looking at Meta on at B, I would probably put it here. Um, it's just a way more risky bet than than most other stocks here. I could also see how it's lower. Um, if Shopify is D, you could probably you could probably put it lower.

We talked about Meta Hermes is like, you know, again, incredible company, not diverse, earning still. Yeah. And like an expense, like not an obviously cheap valuation.