8. Meta Platforms, Inc. (NASDAQ:META)
Latest Fiscal Year Annual Growth Rate: 15.69%
Bridgewater Associates’ Q1 2024 Investment: $482 million
Meta Platforms, Inc. (NASDAQ:META) needs no introduction due to the near ubiquity of its social media products. Its size and heft, aided by a large user base, means that the firm has to continuously think of unique ways to increase user engagement on Facebook and Instagram. The more time users spend on Meta Platforms, Inc. (NASDAQ:META)’s platforms, the more money the firm can earn through advertisers, which are often eager to work with it due to the sizeable user base. Meta Platforms, Inc. (NASDAQ:META) has also kept itself abreast with the latest technology trends by not only competing at the high end of the artificial intelligence industry through its Llama AI model but by also integrating AI features into its platform to drive consumer engagement. This makes Meta Platforms, Inc. (NASDAQ:META) an early mover in integrating AI into social media, and the only headwinds that it can face are a slowdown in ad spending due to economic weakness or regulatory action against its heft.
Baron Funds mentioned Meta Platforms, Inc. (NASDAQ:META) in its Q1 2024 investor letter. Here is what the fund said:
Shares of Meta Platforms, Inc., the world’s largest social network, rose 37.3% in the quarter due to robust fourth quarter top-line growth of 25% year-over-year with operating margins more than doubling year-over-year to 41%, benefiting from the year of efficiency12 as Meta’s headcount was down 22% year-over-year (note that the profitability of the core business is even stronger as Reality Labs’ losses of over $4.5 billion in the quarter are included in the overall operating income metric). Meta also guided for first- quarter revenue growth of approximately 29% year-over-year, which was better than expected. Advertiser satisfaction and adoption of Meta remains strong, core app engagement is healthy with video daily watch time up 25% year-over-year and the total number of monthly active users up 6% year-on-year to 3.98 billion in the fourth quarter, and Instagram Reels and click-to-message ads monetization continues to improve. Meta also continues to rapidly innovate in GenAI, with its leading research lab releasing widely adopted open-source models (e.g., Llama 2), and internal algorithms and core apps becoming augmented with AI (e.g., Meta’s recommendation engine). We remain shareholders and believe Meta can sustain its leading market share in digital advertising thanks to strong network effects enabled by its massive user and advertiser base. Additionally, we believe the company’s innovative culture, large installed base, and leading GenAI research should enable it to embed AI and GenAI into its offerings with further monetization opportunities ahead. For example, AI agents could help scale business messaging, handling a large volume of customer requests on behalf of business customers, making business messaging at scale more viable.
