Meta and Snap

Social media companies, especially Meta, look very attractive to us. They trade at sensible multiples due to what we think are short term issues and have plenty of free upside options.

Meta stands out as the core business is being valued at ~12x GAAP EPS. Yes there is a lot of noise, but it is worth sifting through it.

• IDFA impact plus Covid related mean reversion and increased investments across the sector means that earnings are depressed in the near term.

  • We think IDFA is not a long-term issue and the industry will develop technology to solve for privacy, targeting and measurement.

• Tailwind for digital advertising remains strong as linear TV advertising declines enabling 10%+ growth for many years, plus strong incremental margins as advertising is essentially a fixed cost business.

Research Report