2. Meta Platforms Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 219
Meta Platforms Inc. (NASDAQ:META) lost $251 billion in market capitalization on February 3, 2022. However, Meta Platforms Inc. (NASDAQ:META) has since rebounded significantly, climbing 116%, while the S&P 500 only gained 23% over the same period. Cramer used this example to illustrate that major market dips can lead to substantial future gains for investors who buy in during these downturns.
“Stocks can’t stabilize until these weak shareholders sell out. History shows that significant market drops like this tend to offer great buying opportunities. For example, Meta Platforms shed $251 billion in market cap on February 3rd, 2022, but since then, it’s rallied 116%, outperforming the S&P’s 23% gain over the same period.”
Meta Platforms Inc. (NASDAQ:META), the parent company of Facebook, Instagram, and WhatsApp, is leveraging its vast user base and leading position in digital advertising to achieve substantial growth. In Q2 2024, Meta Platforms Inc. (NASDAQ:META) reported record revenue of $32 billion, a 12% increase from the previous year, driven by robust digital ad sales. Its net income more than doubled to $9.2 billion from $4.4 billion a year earlier, with earnings per share reaching $3.29, surpassing analyst expectations.
This financial performance is bolstered by a rise in daily active users to 3.07 billion across its platforms. A major factor behind Meta Platforms Inc. (NASDAQ:META)’s positive outlook is its focus on artificial intelligence (AI). Meta Platforms Inc. (NASDAQ:META) has made significant strides with AI-powered advertising tools that improve targeting and ad efficiency. Additionally, AI-driven content recommendations on Instagram and Facebook Reels have increased user engagement. Meta Platforms Inc. (NASDAQ:META)’s investment in the metaverse through its Reality Labs division is also a key growth driver, aiming to create an immersive digital environment.
Mar Vista Focus strategy stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q2 2024 investor letter:
“During the quarter, we established new investments in Broadcom and Meta Platforms, Inc. (NASDAQ:META). We previously divested from Meta during a period of stagnant advertising growth and the company’s initial, significant investment in the metaverse project. At that time, investors appeared complacent to the risks associated to an increasingly competitive landscape, and the Street’s robust financial expectations as the company transitioned towards monetizing short-format video (Reels). The subsequent decline in Meta’s stock price during 2022 reflected these concerns.
Since then, Meta has demonstrably shifted its strategic focus. The company has prioritized operational efficiency, implemented strategies to monetize Reels effectively, and initiated a robust artificial intelligence (AI) development program. We believe the focus on AI represents a more prudent capital allocation strategy compared to the earlier metaverse initiative. Meta AI holds significant potential to unlock substantial monetization opportunities and enhance user engagement, while maintaining tight controls on operating costs…” (Click here to read the full text)
