Meta Platforms Inc / Facebook (META)

Apple's product presentation today was far better than anything he's seen by Meta. 

It is one of five or six stocks that are driving the sector. It is up 44% on a one year basis and is maybe overbought. You could start trimming and sell half now. Don't buy today because there is resistance at this level. It is part of the long term AI trend. The technical growth space is very cheap now on a price to sales basis. We could be in a brand new bull market.

#2 holding in portfolio. 
Excellent business with good long term prospects.
Asset light, low capital requirements, high margins/return on equity.
$3.8 billion active monthly users (massive).
Revenues per user is $50 per year (North America).
Strategy shifting towards increased revenue per user (only so many people on planet).
Very difficult to replicate network effect.
Expenditures on metaverse not a concern.

He missed some tech stocks like MSFT and Meta--both can keep going with efficiencies, good balance sheets, cash flow and safety.

He just bought it. Is impressed by its momentum and growth. The issue of the past are in the past. He sold this in January 2022 to lighten up on big tech and has just bought back several tech stocks, including this.

There's room to run. Instagram has held in. Perhaps Reels is seeing momentum and maybe digital ads are rising. If these happen, then expect some (not huge) revenue acceleration which will move shares higher.

She trimmed twice recently. A lot of the upside has already been priced in, since last October's bottom. That said, she thinks they've learned their lesson about spending so much on the metaverse, and they are actively cutting costs instead. 

Recently trimmed her holding to a small position. Meta has made a huge moves in the past 6 months, so it taking profits and will wait patiently.

If/when the economy slows, the big money won't leave the table but shift to other sectors, particularly big tech. Tech tends to outperform in a normal slowdown without much inflation--any tech involving AI and tech replacing expensive workers with cheaper software to raise efficiency. Meta is one example. Once despised, Meta has momentum ever since laying off many of its workers--Zuckerberg was the first to aggressively trim the workforce and forecast an economic slowdown ahead. Meta costs are going down as its sales go up. Instagram, for example, is up 300 basis points. Meta shares seem unstoppable. When SVB collapsed, tech stocks rallied, especially those with an AI kicker.

#2 stock in Q1, up 76%, roaring ever since the CEO started cutting costs, meaning laying off nearly 25% of the workforce recently. Also, its Reels have boosted the stock and is competing with TikTok. Up to 21x earnings, but that's okay because the CEO is cutting costs and that could reignite earnings growth.

He just bought it, though he's overall bearish about the market. Meta trades at 19x at a slight premium to the market. It has great momentum. On down days, its volatility is lower. This is risk-controlled. If TikTok gets banned, this will only add to Meta.

Hated CEO Zuckerberg has been beefing up Reels on Facebook to battle TikTok--and it's working. Also, he's laying off a lot of staff. That's why Meta has been rallying.

Given the TikTok hearings in Washington now, he'd rather own Meta than Snapchat. After TikTok, we'll be watching Meta's Reels. CEO Zuckerberg has invested so much in Reels that it will surpass TikTok anyway.

In the space of just one week--SVB and Credit Suisse meltowns--we've  gone from expecting the Fed from raising rates by 0.5% to cutting. It will be the most-anticipated Fed meeting (next week) in recent meeting. The next move is significant, and we don't know what. Their dilemma: raise or cut? When rates move up, it's hard to make money in stocks. Today, you had to buy food, drug and senior tech stocks like Meta. Drug stocks do well in recessions and pay dividends. Meta just announced a second round of mass layoffs. Billions of dollars in expenses will come out of Meta, while revenue will remain the same. Shares rallied yesterday and today and it's not done yet.

Meta shares now trade around $180, half of its peak in September 2021, but twice as much as the bottom of last Hallowe’en. This year so far, Meta has easily outpaced stalwart megatechs Apple and Microsoft which have climbed about 17% and 6.5% respectively. Meanwhile, Meta has jumped over 50%. The Nasdaq has risen only 7.4%. Read Silver linings in the SVB fall-out for our full analysis.