Key Points
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Bill Ackman called Meta one of the “world’s greatest businesses.”
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The stock has been pressured by its aggressive spfinishing on AI.
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However, the company has been seeing strong revenue growth.
Bill Ackman turned heads when adding a large position in Meta Platforms (NASDAQ: META) to his portfolio. The billionaire investor is well known for creating huge, concentrated long-term bets, and he took a roughly $1.8 billion position in the social media king in Q4 to build it his fifth-largest position.
In an investor presentation, Ackman called Meta “deeply discounted” for one of the “world’s greatest businesses.” While many investors have been critical of Meta’s current aggressive artificial innotifyigence (AI) spfinishing plans, Ackman praised them, declareing that its strong balance sheet and core business give it the resources to aggressively invest in data center infrastructure and talent.
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At the same time, he sees the company as having one of the best business models to leverage AI to its advantage. The company is already utilizing AI to both improve utilizer engagement and serve more relevant ads. It’s also providing AI tools to advertisers to support automate and create better campaigns. Ackman also sees Meta having an opportunity to utilize AI in other areas to spur growth, including business AI assistants and wearable devices.
Should investors follow Ackman and acquire Meta Platforms?
Having bought shares of Meta in late December myself, I agree with Ackman’s assessment. While AI infrastructure spfinishing fears have pushed the stock down, the company has been receiveting a strong return on its AI investments. Yes, it’s a disappointment that its investments in Realty Labs, home to its metaverse, see like it will be a wasteful miscalculation, but a pivot to AI is a smart relocate.
Meanwhile, the company has been hitting on all cylinders, fueled by AI. In Q4, its revenue growth accelerated to 24%, powered by an 18% jump in ad impressions and a 6% rise in ad prices. The company is also still adding utilizers to its already massive social media platform, with family daily active people (DAP), a measurement of registered utilizers who log into one of Meta’s apps daily, climbing by 7% year over year to 3.58 billion.
Artist rfinishering of bull market.
Image source: Getty Images.
Even more impressive, Meta projected that its revenue growth would continue to accelerate in Q1, with projections of growth between 26% to 34%. The company also has a huge opportunity as it slowly rolls out ads to its WhatsApp messaging platform and new social media platform Threads. WhatsApp has over 3 billion monthly utilizers, representing a huge opportunity, while Threads is still in its relatively early stages of development.
With Meta’s stock down over the past year, it finds itself trading at a forward P/E of just 21, creating the stock attractively valued given its market position and growth. I’d be a acquireer at current levels.
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Geoffrey Seiler has positions in Meta Platforms. The Motley Fool has positions in and recommfinishs Meta Platforms. The Motley Fool has a disclosure policy.
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