Trade Update

Trade Update - Meta

_{Posted by Club Member Mark Ace21 11.7.23}

I initiated a new long position in Meta on June 7. The trade is up just over 6% as of yesterday’s close.

Meta’s Threads just passed 100 million new users, the excitement around this new product probably helped lift sentiment for the stock. I do think it’s still too early to be modelling out any incremental revenues from Threads.

The biggest takeaway for me, from the launch of Threads, is the demonstration that 2023 continues to be the “Year of Efficiency” for Meta, as Zuck puts it. Rumour has it that Threads was build by an internal team of just 20 developers over 6 months.

In 2022, the stock was re-rated down, and saw a 70% decline in value, when Meta was committed to burning $10 billion a year building out the Metaverse, a project that was likely going to take a decade to fully realize. Now, contrast that with Threads!

I think investors will continue to reward Meta for its laser focus on cash flows, productivity, and execution. At 24x forward PE, the stock is cheaper than most of its mega cap tech peers, and the stock is still 20% below its all-time-high.

I am expecting Meta to surprise to the upside at its next earnings report on July 26, with revenue growth and robust free cash flows (see original post for context), and the stock to continue its upward trend.

Looking for more trade ideas? Check out the trades our members are discussing at the Daily Market Exchange.

Subscribe to receive more Trade Alerts!