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Redpilled Mark, Meta in EU + The Stock is Wild

Ahoy Metamates! 🚢 🏴☠️
It’s been a minute. But Meta never disappoints when it comes to drama. When I first started writing this newsletter, it was mainly to stick it to stock analysts like Brian Nowak, whose incompetence on how technology works was sinking the stock.
But not that the stock price is up and to the right, I wanted to take a step back and think bigger about what recent shifts in narrative and investment focus mean for the future of the company.
This issue will explore the three key themes driving Meta at a time where it’s near the ceiling of its price projection: Mark going to the right, hardware wins and AI costs. What would it take for the stock to break $1000?
For stock price projection info - scroll straight to the bottom
The Rise of Giga - Mark

Gold chains, custom designer clothes and significantly more reasonable hair - but really, it’s more about Mark post-Sheryl.
Markets have short memories so few people remember that Facebook’s IPO was anything but hot. In fact, it was relatively crappy. The stock got a lot of news hype and then traded below it’s $38 expectation for 15 months.

Facebook stock price on day 1 Source: The Atlantic
The IPO price was $38 per share.
In the first 30 seconds, around 82 million shares were exchanged
The stock set a new record for trading volume for an IPO but was considered a disappointment on price ( see chart above)
The stock ended its first full week of trading at $31.91, a 16.5% decline.

The Atlantic, 2013
To make Facebook massive, the leadership had to adult hard and fast. Therein there was a transition from “Mark the brilliant engineer in Adidas flip flops” to “ Mark the somewhat awkward guy in a suit”. A bad suit, at that.
The IPO was a crapshoot because:
Facebook lowered its revenue projections while in IPO roadshow
Analysts were notified last minute (and not in the greatest way)
An amended and relatively unclear S-1 was filed ( almost never happens)
Consensus amongst hedge funds was to short the stock on day 1
Why am I telling you this? The simple facts here show leadership at the time did not have sufficient capital markets sophistication to steer the narrative, left everything up to analysts and banks and the result was a disaster that almost killed the company.
What I hear from people inside the company at the time is that came with a significant rise in Sheryl’s role, being put forward as one of the experienced and polished executives who market makers could trust. There’s a myriad of articles and videos from that time of Sheryl become highly visible, at times eclipsing Mark, as a voice to market makers.
When she [Sheryl] joined the company, I was like a kid…. I was in my early 20s and didn’t know anything about running a business or company or anything like this…. As a manager of an organization, I think she sort of like raised me like a child. And, not just me, I think a lot of the people we have on the team now.
Interviews became joint between them - with her often at the edge of her seat watching him carefully, almost guarding the narrative.
And now - there’s no more Sheryl.
By all means, shots were fired and press like this feels highly intentional -

WSJ, 2022
As of January ‘23 she’s out- out. Officially off the board as well. The entire Mark metamorphosis to what I’m calling Giga Mark is in the wake of Sheryl’s departure. This is probably the first time since before the IPO that Mark is operating as, basically, himself.
Sheryl Era Balance Sheet:
Growth by M&A and incremental strategic bets
Fiscal conservatism
Heavy hiring for non-tech functions
Boxes for experiments like Building 8
Focus on international markets
Giga Mark Era Balance Sheet:
Aggressive technical and financial investments
Focus on creating IP, not buying it
Hiring focus shifting to tech roles, salaries for ops decreasing
Earnings narrative more focused on future state
More public disclosure on experimental projects
Direct stance on competitors with analysts
TLDR: Facebook was a Sheryl driven narrative. Meta is Mark’s company.
Basically, it’s safe to say that to be a long term investor in Meta, you need to wipe your memory of many, if not most, of the core assumptions you have about the fundamentals of the business in the last decade.
Mark has always been redpilled ?- and that’s a positive for the stock
If the recent news about Mark is upsetting you, we probably knew nothing about Mark. The writing has been on the wall for an extremely long time. Peter Thiel had been on the board for nearly a decade. Meta was always a meritocracy driven culture pre- Sheryl. And it’s not a secret to anyone that Meta cares so much about its relationship with the Israeli Government that it has an appointed liaison, who regularly lobbies its agenda.
Imho, Mark has always been conservative but he’s spent the last decade playing the role he was told a CEO should play, including major political donations.
But being a democratic donor and DEI supporter has its own friction:
$100M + spent on lobbying dems - with limited success. link here
Millions spent on DEI initiatives - only for a DEI manager to steal $4M from the company - she’s now in jail
Another major factor here is Marc Andreessen - who is currently working with Trump directly to fill key cabinet positions in technology and deference. Marc also happens to be on Meta’s board. Between that and Joel Kaplan, It was inevitable for Zuck to follow suit and kiss the ring. And, I would argue it exponentially increases Meta’s ability to deliver on its roadmap. Those hundreds of items Meta is lobbying for years for? Removing these hurdles leads to direct revenue.
Last point on the Zuck pro- Trump stance:
Big Picture: Meta needs to be friends w Trump for 2 key reasons:
1) Meta’s major rival in AI is not Microsoft or Google but China. An entire nation-state fighting against you means you need to align with your own government to be the victor.
2) TikTok could soon be banned… I mean sold. And wouldn’t it be nice if it were to Meta? Idk if Trump can kill the Anti-Trust situation, but he’s buying Greenland supposedly sooo
Europe has been a dumpster fire
ARPU in Europe has better near term potential than “ Rest of World” (duh) but every time Meta ships something, it gets sued. And, not like- a little sued, I’m talking major:

Meta revenue spread in 2024
Absolutely no amount of lobbying, goodwill or remediation attempts have yielded any results. Meta even hired the former deputy prime minister of the UK, Nick Clegg. Doing business in Europe is basically impossible. But it will have to become possible if we want to see the stock go up.
Enter: John Elkann on the board

New Europe Tzar for Meta
Seemingly a random. But really- he’s the key to Europe. He represents one of the most influential families in Europe, the Agnelli, who are basically the Kennedy’s of Europe but more intense. They own nearly all big car companies, news publications and sports teams. But more than that, they set the tone for what’s important. It’s long been the case that they’ve owned key publications like the Economist, which heavily influence leaders and policy direction in the EU.
TLDR: Meta is preparing to make a more aggressive play in the EU, which can directly increase the stock price if successful.
Hardware will matter a lot
The Rayban glasses were on everyone’s shopping list this Christmas and Quest has found it’s audience for right now are boomers. More importantly- does anyone even remember the Apple AR headset thing? Yeah, exactly.
Meta’s hardware got so good, it beat Apple for the first time. And narrowly beat Snap.

Never seen anything stupider looking in my life
Apple glasses have been predicted to come out next year for the past 30 years.
Doubling down on hardware now and shipping Orion will inevitably have a positive stock analyst response. The only two CEOs in contention for “ Steve Jobs” status are Zuckerberg and Jensen. And, let’s be honest, analysts don’t super understand NVIDIA and consumer is just sexier.
TLDR: If Meta’s hardware success is sustained, it can drive the stock up steeply.
Ads = AI for right now
Stock analysts only understand AI in the context of ad revenue. So, most of the back of the napkin math is “ costs to run data centers” vs “ ad revenue coming in” and as long as that stays positive, Meta can afford larger infra bets.
From last earnings:
500 MAU engage with Meta AI cross platform
8% increase in Facebook time spent and 6% increase on Instagram from AI improvements
Over 1 million advertisers used GenAI tools to create 15+ million ads in Q3
Businesses using Image Generation seeing 7% increase in conversions

Basically, anything that keeps you on the platform longer contributes to > chance you’ll click on an ad or buy a product. This is a use case that’s easy for analysts to grasp and it also positions meta as the superior AI player ( monetizing ads vs usage).

Source Eikon, 2024
However, two key themes Meta doesn’t have great answers on right now are threatening a re-hash of the stock plunge from ‘23
Questions about depreciation schedules for servers (5-year vs 6-year lifecycle)
Interest in CapEx allocation between servers vs data centers
TLDR: Analysts happy with AI driven revenue but growing concerns on capex/ focus on ROI timeline for AI infrastructure investments
Random Headwinds
Tiktok Sale
There’s some semi-real chance TikTok gets banned - but I think it’s a non zero chance it gets sold… to Meta. It would make for some interesting stock price movement even if just leads to user migration, to say the least.
Morgan Stanley:
Every 10% of TikTok’s US time META captures would likely add ~$0.30-$0.60 to our ~$30 ‘26 EPS….depending on monetization level. Said another way, META’s ability to capture half of TT’s time would likely add $1-$3 (5%-9%) to our ‘26 EPS.

Ebay thing works
Marketplace has high engagement but is insanely under-invested and now a focus of a $800M EU fine. Fair to say, it’s either this new Ebay partnershp works, or Marketplace will get chopped.
The good (data from Alphawise):
72% of FB users visit Marketplace
41% use it weekly and 20%+ daily
>1B MAUs in 1Q:21
52% of resale shoppers bought an item through Facebook Marketplace in ‘23
The bad:
Unlike Ebay, Meta does not monetize the actual transaction - people meet in person to exchange money with goods.
In this partnership, Meta would show Ebay listings and get a cut of each sale. Originally conceived as a way to escape EU fines, it might actually end up as a massive revenue opportunity and directly compete with Google Shopping.
Interestingly, no major overlap between Ebay and Meta - a great sign that this might work.

Finally, let’s talk projections
This is a unique time - Meta’s stock is trading at a nearly identical $ amount to what it’s top analysts believe it’s worth. We’re looking for strong holiday results in the next earnings or bust.

Jan 15 ‘25, TR data
My personal king, Eric Sheridan @ Goldman Sachs has Meta @ $668 and his success rate in prediction avg. is 80%. His key themes showed he’s forming a thesis on AI and is not yet convinced:
Where they're seeing early wins with AI
What's surprising them about AI implementation
Which AI applications are showing better-than-expected returns
That coincides with how Morgan Stanley sees it - they have a $600 base case and a $740 Bull case. For their most aggressive bet, they need to see the following:
AI investments drive increased engagement and lead to new products/tools, which supports outsized ad monetization and revenue growth. Execution on newer offerings (like click to message) could also contribute to higher than expected growth. META could also drive further efficiency gains and be more successful in closing the Reels monetization gap. Reality Labs losses moderate and macro environment is better than expected.
Morgan Stanley Report on Meta, 2044 Q3
Next earnings call should be very interesting…
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