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META Stock - What we think the Value is before Earnings!
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META Stock - What we think the Value is before Earnings!

News Follows the Price

In this section, the speaker discusses how news follows the price of a stock and not the other way around. He also talks about his experience with buying Meta at a low price.

Buying Stocks at All-Time Low

  • The speaker shares his experience of buying Southwest at $25 and seeing it go straight up from there.
  • He bought Meta on November 4th, 2021, for $88 per share.
  • The speaker got lucky as it was only the second time in history he had bought a stock that potentially could be an all-time low.

Analyzing Meta as a Potential Value Play

  • The goal is to analyze Meta and determine if it's a potential value play.
  • Despite negative news surrounding Meta, lately, the news has been great because of its rising stock price.
  • News follows the price of a stock and not the other way around. When a stock plummets, news focuses on why it's down. When it goes up, news focuses on why it's up.

Analyzing Meta

In this section, the speaker analyzes Meta by looking at its market cap, enterprise value, revenue, profit margin, active users among Instagram and WhatsApp Facebook.

Market Cap and Enterprise Value

  • The market cap for Meta is $585 billion.
  • The enterprise value is $566 billion with only $19 billion in debt.

Revenue and Profit Margin

  • Over the last 12 months, Meta has generated $117 billion in revenue with a profit of $23 billion.
  • Gross margin Mo is 78% which indicates high profitability.

Active Users

  • There are over three and a half billion active users across Instagram, WhatsApp Facebook which represents almost half of the world's population.
  • Meta has a 16% return on invested capital which means they get a great return on the money invested in the business.

Return on Invested Capital

In this section, the speaker discusses how higher return invested capital means that companies don't have to invest as much money to protect their business.

Return on Invested Capital

  • A higher return on invested capital means that companies don't have to invest as much money to protect their business.
  • This is a sign of a moat kind of status.
  • Facebook will have $60 billion extra dollars in their pocket to buy back shares, pay dividends, and pay down debt.

Eight Pillars

In this section, the speaker talks about how Meta is lighting up green across all eight pillars except for cash flow.

Eight Pillars

  • Meta is lighting up green across all eight pillars except for cash flow.
  • There was a big explosion in cash flow in 2021 due to online advertising during COVID.

Sign up for Everything Money

In this section, the speaker encourages viewers to sign up for Everything Money before the price increases. He explains that the price will go up by a dollar every month and that signing up now will lock in the current rate forever.

  • The price of Everything Money is going up soon to $39 a month.
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Analyst Estimates for Meta

In this section, the speaker discusses analyst estimates for Meta's growth over the next few years. He also talks about revenue growth and high return on invested capital.

  • Analysts estimate decent growth for Meta over the next few years, with shares reaching 13 dollars in profit.
  • Revenue is growing, and with high return on invested capital, profit can grow faster than revenue.
  • Overall revenue growth is expected to be high single digits over the next five years.

Using Stock Analyzer Tool

In this section, the speaker introduces using a stock analyzer tool to determine the value of Meta's business. He mentions that they will do a 20-year analysis and Mo will do a 10-year analysis.

  • They will use a stock analyzer tool to determine Meta's business value.
  • They will not include balance sheets in their analysis.
  • The speaker plans to do a 20-year analysis while Mo does a 10-year analysis.

Bull and Bear Points on Meta

In this section, the speaker goes over a couple of bull and bear points on Meta.

  • Bulls are shifting their capital expenditures to focus on the family of apps, which includes Facebook, WhatsApp, Instagram, etc.
  • The price per ad has decreased year over year, but spending on the family of app side has increased by 18%.
  • Average revenue per user in the United States is $60 per user. Around the rest of the world, it's $4.
  • There is a lot of revenue potential for Meta in emerging markets like China, India, and Africa.
  • Bear arguments include an increase in research and development (R&D) spending by 43%, losses increasing by 35%, and cap x per share increasing by 86%.

Facebook and Instagram Analysis

In this section, the speaker discusses the potential risks associated with investing in Facebook and Instagram. They also analyze the growth potential of these platforms.

Risks Associated with Investing in Facebook

  • Users deleting their Facebook accounts and moving to other platforms could be a risk.
  • However, there are still many users on Facebook, including older generations.
  • The speaker gives an example of a math problem that went viral on Facebook to illustrate how people engage with the platform.

Growth Potential of Instagram

  • Instagram has a younger user base that will likely continue using it as they get older.
  • WhatsApp has not been monetized yet, but there are rumors that it may happen in the future.
  • The speaker believes that Africa is an untapped market for growth.

Analyzing Revenue Growth and Profit Margin

  • The speakers conduct a 10-year analysis (mode) and 20-year analysis (speaker).
  • They discuss revenue growth numbers ranging from 4% to 12% per year.
  • Using last year's revenue of $116 billion, they calculate that in 20 years, revenue could reach $780 billion.
  • They also discuss profit margin numbers ranging from 20% to 35%.

Conclusion

  • The speakers believe that Facebook will still be around in 10 or 20 years and making more money.
  • However, they caution that it's important to buy at a price that makes sense.

Valuing a Stock

In this section, the speaker discusses how he values a stock and determines whether it is undervalued or not.

Determining Profit Margins

  • The speaker matches his profit margins for PE and price to free cash flow.
  • He did 20, 27, and 34 for profit margins.
  • For PE and price to free cash flow, he did 16, 18, and 20.
  • For return on investment (ROI), he did 10, 12, and 14.
  • He chose nine as his ROI because of the need for a margin of safety.

Value of the Stock

  • The speaker's value range for the stock is $182 on the low end, $273 in the middle, and about $400 on the high end.
  • It is currently on his watch list at $160.
  • The range could be wider depending on what you are doing with it.

Conclusion

  • Based on his valuation methods, the speaker believes that the stock is undervalued.
  • Whether or not to buy shares today is up to individual determination.

Conclusion

In this section, the speaker concludes by thanking viewers for watching and encourages them to check out everythingmoney.com.

Final Thoughts

  • Viewers are thanked for watching.
  • They are encouraged to check out everythingmoney.com
  • A seven-day sign-up option is available.
Video description

You will never get over missing out on META stock, Meta, formerly known as Facebook, is BACK. The tech giant in charge of WhatsApp, Instagram, Oculus, and more tech ventures has rebounded significantly in stock price. What should you make of this? Is Meta stock one of the best stocks to buy now? Find out in the video from Paul Gabrail and Mo Hussein above! 0:00 Meta is BACK 1:25 META stock analysis April 2023 4:38 What are analysts saying? 5:23 Bull cases for Meta 7:26 Bear cases for Meta 10:38 What should you pay? 🚨 7-Day EM Software Trial for $7 Get started now at EverythingMoney.com and begin confidently investing today! ➡ https://everythingmoney.com/store _____________________________________________________ ⚠️ By watching videos posted on Everything Money’s YouTube channel and/or using EverythingMoney.com, you acknowledge that you have read, understand, and agree to the following: Everything Money is Not an Investment Advisor: Everything Money (including Paul, Mo, and Seth) is not an investment adviser, and it is not registered as such with the U.S. Securities & Exchange Commission or any other state or federal authority under the Investment Advisers Act of 1940 or any other law. The investments and strategies discussed in Everything Money’s YouTube videos and on Everythingmoney.com are not and should not be considered investment advice and may not be suitable for you. They do not take into account your particular investment objectives, financial situation, needs, or personal circumstances and are not intended to be specific to you. Before acting on any investment or strategy discussed, you should always do your own research and make your own independent decision about whether it is suitable for your particular circumstances. You should also consider seeking advice from your own legal, financial, tax, accounting, or investment advisers. Everything Money does not provide such advice. READ THE FULL DISCLAIMER HERE: https://everythingmoney.com/disclaimer