![]() ![]() Aggressive repurchases would likely boost Meta stock as well, raising the company's cost per share. Its repurchases would be constrained by the cash it has available, the trading volume of its stock, and how much buyback spending has been approved by its board. However, it's worth emphasizing that even if Meta could start its buybacks today, it probably wouldn't save quite that much money. If the company could erase all of its buybacks since 2017 and conduct them at today's price instead, they would theoretically cost $53 billion less - more than one-sixth of Meta's current market capitalization. Meta's stock slump has made its past repurchases look expensive. The sell-off has been fueled by mounting doubts about Zuckerberg's expensive bet on the metaverse, concerns about an advertising slowdown, and investors dumping tech stocks in favor of safer assets. Shares of the Facebook, Instagram, and WhatsApp owner have plunged 70% this year, slashing the company's market capitalization from about $900 billion to around $270 billion. Those shares would cost under $38 billion - or nearly 60% less - to buy today at Meta's current stock price. Moreover, Meta has spent a total of $91 billion to repurchase 377 million shares between the start of 2017 and September 30 this year, at a weighted average price of around $242 a share, a Markets Insider analysis of Securities and Exchange Commission filings shows. Mark Zuckerberg's social-media giant also repurchased another 100 million shares in the first nine months of this year at a cost of $21 billion, or around $210 a share - more than double the current stock price. Its stock was trading around $100, or less than a third of that price, on Thursday after a post-earnings crash, suggesting Facebook's parent company massively overpaid for its own shares. Now we are watching closely and considering going the other way and overweighting.Meta spent about $45 billion buying back 136 million shares last year, paying around $330 a pop. Of course, we benefited from our underweight in Meta in January. When the stock crashed, our DNB Technology team took the opportunity to buy meta stocks up toward neutral valuation. He had seen the signs of the future many times ahead of time, moving Facebook to mobile and buying up Instagram, to name a few. ![]() Mark Zuckerberg is - and investors should not forget this - intelligent. Meta is much more prone to doom and gloom than its competitors. However, competitors like SnapChat and Pinterest are not experiencing the same trends. authorities that they are being threatened from all sides. I wonder if Meta is using this opportunity to prove to U.S. Antitrust authorities who think it would be reasonable for Meta to be split up. Epic is suing Apple because it believes the company is acting as a monopolist. This could provide ammunition for Epic, the game developer known for Fortnite, in its lawsuit against Apple. That means the ads will have a smaller impact and will become less profitable to advertise. ![]() Meta has also reached out to Apple, though Meta has been given limited insight into its ecosystems. Apple requires app publishers to ask permission to collect data - much to the dismay of companies like Meta, whose business model is based on selling ads that are finely tailored to consumers' tastes and habits. Most importantly, the company had warned that targeted advertising rules imposed by iPhone maker Apple last year could have a negative impact on its financial results. We believe it is difficult to predict whether there will be a further regression in 2023.Īttacks from all sides, including the authorities In our view, we could see a decline in profits in 2022. However, we believe that the sharp increase in investment should not be developing the metaverse, as some believe, but artificial intelligence and privacy insights. The company indicated that users on Instagram, for example, were spending more time on "reels," a short video format inspired by competitor TikTok "that generates lower compensation rates" than traditional Instagram formats.Īt the same time, the company plans to increase capital spending by 60 percent. Meta said it is more difficult to get users' attention due to growing competition. Meta is projecting three to 11 percent revenue growth in the first quarter, 30 percent increase in costs, stronger competition from TikTok and young people exiting the platform. It was the most depressing quarterly earnings presentation I've ever seen. The company's shares subsequently fell more than 22 percent in electronic trading after the close in New York. However, that was not the cause of the shock and stock market crash. ![]() In early February, Meta presented its quarterly report, which turned out to be about as expected, showing a growth of 20 percent. Since the launch in the year of DNB Fund Technology, I have been following Meta, or Facebook as it was called not long ago, as co-portfolio manager. ![]()
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