How to use the company sheets
The company sheet provides a quick, clear overview of key financial metrics, past performance, analyst estimates, and my personal insights for investors looking to understand the business fundamentals ofMeta. It includes information and key metrics I personally use in my analysis and decision-making process. The goal is to enable readers to make profound and better-informed investment decisions.
The company sheets are dynamic
This document is dynamic and will be updated regularly, typically quarterly following company earnings reports. Subscribers will be informed about updates through my newsletters, Substack chat, or notes but will not receive separate notifications.
Why I use percentage terms?
Please also note that revenue and earnings growth are shown in percentage terms to provide a clear picture of performance trends and comparability rather than absolute numbers that may vary significantly by company size.
Why?
The performance of growth stocks often depends less on their fundamental valuation and more on the narratives that the market assigns to them. Narratives such as artificial intelligence, cybersecurity, or the metaverse can trigger significant price movements, as investors in growth stories primarily invest in visionary stories.
Moreover, the dynamics of growth play a crucial role: when a company’s growth accelerates, stock prices often soar. Conversely, if growth slows down, there is usually a sharp correction, regardless of whether the stock is fundamentally undervalued. It’s essential not just to consider whether growth is present but particularly how the growth dynamics change, whether growth is steadily accelerating or continuously weakening.
This dynamic explains why many value investors frequently miss out on top-performing stocks and instead buy stocks that appear undervalued or previously high-performing stocks once they become cheaper. Often, these stocks have become cheaper precisely because their growth momentum has diminished.
For investors, this means that when dealing with growth stocks, it is critical to focus not only on valuation metrics but especially on which narratives currently dominate and how growth expectations evolve.
Quick take on Meta (my personal notes):
- After a disappointing FY 2022, META’s revenue growth is accelerating noticeably again. 💪🏻
- Unlikely that the company will manage to keep up the speed as estimates are consistently downwards. This keeps the expectations “low”, generating some decent upside potential in case of earning beats.
- In Q4 2024, the operating margin of 48.4% was the highest since Q4 2017.
- The operating margin is worth monitoring. I doubt that META can maintain this level of profitability, given the company’s announcement to spend $65bn this year. But here again, this should already be priced in, so an earnings surprise might lead to a positive market reaction.
- Regarding META’s 5%-dividend hike, I am slightly concerned that META might not prioritize a shareholder-friendly dividend policy as much as Booking Holdings, which began paying dividends at the same time but has already raised its payout by 10%.
ARPU growth
Note: ARPU (Average Revenue Per User) is a key metric for META that measures the revenue generated per user over a specific period. As you will see below, there is a clear trend. The reasons for this are:
- AI: META’s advanced AI-driven ad tools, like Advantage+, have significantly improved the company’s ad efficiency.
- Recovery from Apple’s Privacy Changes: After Apple’s App Tracking Transparency (ATT) disrupted ad targeting, META adapted with AI-based tracking solutions and server-side data tools.
- New Revenue Streams & Strong Ad Demand: Increased monetization from Reels, WhatsApp messaging ads, and Meta Verified subscriptions, along with a rebound in digital ad spending, has driven ARPU growth.
2024:
- Q4 ‘24: 43.6% ⬆️
- Q3 ‘24: 42.7% 🔻
- Q2 ‘24: 44.4% ⬆️
- Q1 ‘24: 49.1% ⬆️
2023:
- Q4 ‘23: 16.4% ⬆️
- Q3 ‘23: 15.7% ⬆️
- Q2 ‘23: 5.3% ⬆️
- Q1 ‘23: -0.6% ⬆️
Past revenue growth in %:
2024:
- Q4 ‘24: 20.6% ⬆️
- Q3 ‘24: 18.9% 🔻
- Q2 ‘24: 22.1% 🔻
- Q1 ‘24: 27.3% ⬆️
Read the full company sheet on my Substack to get the full picture and all metrics (it is free).
