The Case for META

Key Concepts

• Meta Platforms (META) stock
• Forward Earnings Multiple
• Market Multiple
• Home Depot (HD) stock
• Housing Market
• IRA (Individual Retirement Account)
• Tax Write-off
• Earnings Report
• Year-end Meltup
• Bearish Sentiment
• Mark Zuckerberg

Meta Platforms (META) Investment Rationale

The speaker discusses their recent purchase of Meta Platforms (META) stock, citing a forward earnings multiple of 19 times. They consider this valuation to be at the "market multiple," indicating a level of comfort with holding the stock. The strategy is to potentially buy more if the stock price declines further.

Portfolio Adjustment: Swapping Home Depot for Meta

The speaker reveals they swapped their position in Home Depot (HD) for Meta. This decision is attributed to the perceived weakness in the housing market, which they believe is a "housing storing story" (likely a misstatement or colloquialism for a struggling housing sector). The Home Depot sale resulted in a 7% loss within their IRA, which they acknowledge cannot be used as a tax write-off but deem "no big deal."

Current Sentiment and Potential for Rebound

Despite Meta being down 25% and facing legitimate reasons for selling, the speaker is buying. They believe the stock is currently in the "penalty box," implying it is undervalued and overlooked by the market. The speaker expresses confidence that even if a year-end "meltup" (a rapid increase in stock prices) occurs, Meta might not be an immediate leader, but they still favor the purchase.

Historical Precedent and Zuckerberg's Track Record

A key argument for investing in Meta is the historical pattern observed when sentiment towards Mark Zuckerberg becomes bearish. The speaker states, "We've learned so many times what happens when everybody gets bearish on Zuckerberg. Whenever that happens, it's only a matter of time before he pulls another ace out of his sleeve, ripping back to highs again." This suggests a belief in Zuckerberg's ability to innovate and drive the stock price back to previous highs.

Timing and Risk Assessment

The speaker acknowledges the possibility of being "early" in their investment, meaning they might be ahead of the broader market's recognition of Meta's potential. However, they are comfortable with this risk, especially given the two-and-a-half-month buffer before the next earnings report, which reduces immediate pressure.

Counterpoint and Agreement

Another participant in the discussion expresses agreement with the investment thesis, stating, "I don't disagree with you. I like it." However, they currently do not hold Meta stock, having only "eyeballed it," indicating they are considering a similar investment.

Conclusion

The speaker has initiated a long position in Meta Platforms (META) at a 19x forward earnings multiple, viewing it as a market-level valuation. This move involved divesting from Home Depot (HD) due to concerns about the housing market. Despite Meta's recent 25% decline and negative market sentiment, the speaker believes the stock is undervalued and has strong potential for a rebound, drawing on historical evidence of Mark Zuckerberg's ability to overcome bearish periods. While acknowledging the risk of being early, the speaker is confident in the investment and would not be a seller at current levels.