META. You know what it is. The facebook, instagram, whatsapp company.
META just reported fourth quarter 2023 revenue grew by a staggering +25% YoY to $40.1 billion.
Guidance for next quarter is at a MIND BLOWING +30% YoY (on the high end) to $37B.
I can’t emphasize how ridiculous this is. Keep in mind this is against tough comps next quarter, AND they are accelerating their topline growth at BILLIONS of dollars.
Expenses fell -8% YoY to $23.7B
They cut and laid off 22% of their total workforce from a year ago!
The company is continuing to boost efficiency and slashing costs, returning cash to shareholders.
FCF was $11.5B this quarter. They did $43B in FCF for the full year on revenue of $134B. FCF margin of 32%!
A dividend, for the first time ever, at 50 cents a share was announced.
This will keep a permabid on the stock as this allows a whole new class of “dividend investors” to rush and buy/accumulate META.
And, a $50B share buyback was announced.
From the conf call, emphasis mine:
And last year, not only did we achieve our efficiency goals, but we returned to strong revenue growth, saw strong engagement across our apps; shipped a number of exciting new products like Threads, Ray-Ban Meta smart glasses and mixed reality in Quest 3; and of course, established a world-class AI effort that’s going to be the foundation for many of our future products. I think that being a leaner company is helping us execute better and faster, and we will continue to carry these values forward as a PERMANENT part of how we operate.
Now I want you to think about this for a hot second.
You have a company here doing $40 billion revenue, yes billion, with a capital B, in a SINGLE quarter. And they grew to that at 25% year over year. And are guiding for ACCELERATION in growth next quarter to 30% at the high end. Not only that, it’s a wildly profitable company with billions of dollars of cash flowing everywhere to its shareholders.
Why shouldn’t META be a contender on a board for “hypergrowth” companies? Look at IOT for example. $237M revenue (yeah…M, as in measly millions, not BILLIONS) in the last quarter at +39% YoY with GAAP losses is a shameful comparison.
Do a look back at META when it first IPO in 2012. It did 40% growth YoY to total year revenue of $5 billion, and GAAP net income $1.3 billion.
Do you think IOT is anywhere as exceptional as META and can grow 40% by the time it (ever) hits $5B in revenue and also print wild profits?
Not only that, I would do a quick comparison of share price movements. IOT is up +14.9% since its last earnings on Nov 30.
META is now up +51.5% since prior earnings on Oct 25.
If META were to do, say, $25 EPS next year in 2025 and we slap a 25x multiple on that, META could hit $625 easily by end of this year. +38% return on afterhours $450 price today doesn’t look so bad for an incredible megacap company that is safer than things like IOT.
You know what, SP500 multiple is currently at, what, 20x for single digit growth? Maybe META should get 30x. That could easily put a $750 share price at the end of this year on these lofty forward expectations, that is a +66% return from after hours price. But assuming the market continues to stay bull. And assuming the government doesn’t do any drastic negative regulations against META (this is, I would say, the major risk/reason why META is not my favored pick over AMZN in the long term, of the Mag7)
Seems more attractive risk reward than the constant landmines generated here, such as (borrowing from @PaulWBryant ) ‘Aehrs, Teladocs, Upstarts, Lightspeeds, Rokus, Uipaths, Magnites, 2Us, Talends, Etsys, Amplitudes, and Nutanixes’. (And I would include TSLA to that list)
