Meta

WSJ reported that Meta is considering offering paid versions of Facebook and Instagram to European users in an effort to navigate EU privacy regulations. We think there is 25% chance that this comes to fruition. If it does, we estimate it would add between 2-10% to overall revenue for European availability and 3-15% if available in US and Europe.

Meta's annual developer conference, Connect, highlighted that it shares the same vision with Apple when it comes to the potential of a new headset-computing paradigm, even if its flagship headset is light years behind (though priced far lower). Separately, Meta announced new AI products that will capture meaningful user attention.

Meta's year of efficiency over, and it’s now about years of more efficient growth. The company's cost cutting is done, and the ad market has stabilized. Meta is shifting its focus to investing in AI and the metaverse, funded by a solid core business and DAU's that are growing 4% y/y, ahead of last years 3% pace. All of this should yield earnings growing faster than expenses through 2024. Deepwater is invested in META.

   

The year of efficiency is already working as evidenced by March revenue exceeding estimates by 2% and EPS by 9%. The efficiency page will turn, and investors will soon be thinking about 2024, when the company’s opportunity in AI will be anchored by its current impressive DAU growth. That combo should start a flywheel of AI driving engagement and ultimately increasing revenue growth.

In 2021, the theme of the Metaverse was top of mind for tech investors, punctuated by Facebook's fall announcement of the name change to Meta. Today, tech investors have shifted their attention to AI, making the potential of the metaverse an afterthought. I believe, over the next decade, the substance of the metaverse will live up to the 2021 hype. That belief is based in part on rising investment and competition from TikTok and Apple to enable that future.

Over the last six years, we’ve made a habit of offering a few predictions for the year ahead. Here’s what we’re anticipating for 2023: We believe that FAANG will outperform the S&P in 2023. In 2022, the S&P 500 is…

Meta Connect 2022 offered a clear roadmap of the company’s go-to-market metaverse vision. That vision is a departure from Meta’s roots in consumer-first social products and is anchored in the future of work. Targeting the enterprise is an advantageous approach…

Buried in the vortex of topics around Meta’s September quarterly report is one core question. Can the platform successfully shift engagement and monetization away from Stories and toward Reels? Answering this question is more important than understanding the slowdown in…

From Doug’s blog, The Deload: The current inflationary environment has prompted tech to rightsize headcount with over 60,000 tech employees being laid off in the past year. While sad for the employees, it’s right for the long-term viability of companies and…

Meta could bring NFTs to the masses via Instagram. Mark Zuckerberg mentioned during his speech at SXSW that Instagram plans to integrate NFTs in the coming months. With over 1BN MAUs, Instagram would dwarf existing players like OpenSea (1MN) and…

Tesla raises its prices by 5-10% in part due to the high price of nickel. While this past week has included two price hikes for the company, there’s a likelihood these prices will come down again. The most recent upgrades…