Offshore
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WealthyReadings
Few hours in, $ZETA isn’t very appealing to me.
Revenue growth is rapidly slowing.
FY28 expectations are $2.1B versus $1B in FY24, with guidance of $1.275B for FY25. That implies 27% YoY growth in FY25, followed by ~18% CAGR through FY28 - a clear deceleration.
Sure, 18% CAGR is excellent, but the slowdown raises questions about usage and demand.
The bull case seems to rely on growing spending from existing clients, shown by the rising proportion of $1M+ accounts. I assume bulls will argue this proves the service is valuable, but growth cannot be sustained only by existing clients. They need new ones, within a very competitive industry.
And onboarding has been weak since the LiveIntent acquisition end of FY24, which provided a boost but highlights a very slow organic growth. They bought their user base growth. External demand didn't really follow.
ARPUs are also flatish YoY despite more high spenders, meaning a weaker spending from smaller clients so the growing usage is so-so imo.
The company is probably solid and will grow, but most onboardings haven't been organic and demand looks limited, although many companies thrive on their user base.
But as an investment, this feels like a growth story with slowing momentum and no clear demand drivers in a crowded sector.
Even excluding giants like $GOOG or $META who have a particular advertising system, they still face competition from $ADBE & co with other advantages.
$ADBE Digital Experience segment has grown steadily at 9% for two years, with the same switching costs that many would attribute to $ZETA as well. Why would clients leave them?
I expect bulls will argue $ZETA offers a better, more efficient service. But without organic growth through new user acquisition, that’s just narrative. Perhaps enterprises prefer more complex workflows but to keep an access to a digital service.
I guess my main question as an investor is: Why would multiples expand?
Multiples don’t matter without growth acceleration or meaningful advantage over competition. $ADBE trades at 6x sales, higher than $ZETA's 3.6x, sure, but why should $ZETA deserve higher multiples than $ADBE?
$ADBE has a stable growth - which is better than a decreasing one, multi‑billion revenues, other business, is incorporated into the most valuable companies' of the world workflows with massive competitive advantages.
$ZETA, by contrast, is a $4B company with slowing growth, limited implantation and no clear path to organic acceleration nor user onboarding, with massive competition.
No disrespect once again, this is the way I see it. Not saying they won’t succeed neither, just that I don’t see why the market would reward slowing growth with richer multiples.
As usual, I’ll probably get some insults for disagreeing with the community. But I’m looking forward for constructive criticism on what I’m wrong on or missing in the story.
Maybe new features are coming as that's often the case with growth companies and if so I'll have the same conclusion than for $PATH: let me see demand and then I'll change my mind. For now, I do not see what would justify multiples expansion.
I’ve heard @wealthmatica is the $ZETA king, so if you’re reading, I’d be glad to hear counterarguments or be pointed toward content with answers.
In the meantime, everything was written with respect and arguments, so if you feel like commenting, try to do the same 🙏.
We're here to make money together, not insult each others.
tweet
Few hours in, $ZETA isn’t very appealing to me.
Revenue growth is rapidly slowing.
FY28 expectations are $2.1B versus $1B in FY24, with guidance of $1.275B for FY25. That implies 27% YoY growth in FY25, followed by ~18% CAGR through FY28 - a clear deceleration.
Sure, 18% CAGR is excellent, but the slowdown raises questions about usage and demand.
The bull case seems to rely on growing spending from existing clients, shown by the rising proportion of $1M+ accounts. I assume bulls will argue this proves the service is valuable, but growth cannot be sustained only by existing clients. They need new ones, within a very competitive industry.
And onboarding has been weak since the LiveIntent acquisition end of FY24, which provided a boost but highlights a very slow organic growth. They bought their user base growth. External demand didn't really follow.
ARPUs are also flatish YoY despite more high spenders, meaning a weaker spending from smaller clients so the growing usage is so-so imo.
The company is probably solid and will grow, but most onboardings haven't been organic and demand looks limited, although many companies thrive on their user base.
But as an investment, this feels like a growth story with slowing momentum and no clear demand drivers in a crowded sector.
Even excluding giants like $GOOG or $META who have a particular advertising system, they still face competition from $ADBE & co with other advantages.
$ADBE Digital Experience segment has grown steadily at 9% for two years, with the same switching costs that many would attribute to $ZETA as well. Why would clients leave them?
I expect bulls will argue $ZETA offers a better, more efficient service. But without organic growth through new user acquisition, that’s just narrative. Perhaps enterprises prefer more complex workflows but to keep an access to a digital service.
I guess my main question as an investor is: Why would multiples expand?
Multiples don’t matter without growth acceleration or meaningful advantage over competition. $ADBE trades at 6x sales, higher than $ZETA's 3.6x, sure, but why should $ZETA deserve higher multiples than $ADBE?
$ADBE has a stable growth - which is better than a decreasing one, multi‑billion revenues, other business, is incorporated into the most valuable companies' of the world workflows with massive competitive advantages.
$ZETA, by contrast, is a $4B company with slowing growth, limited implantation and no clear path to organic acceleration nor user onboarding, with massive competition.
No disrespect once again, this is the way I see it. Not saying they won’t succeed neither, just that I don’t see why the market would reward slowing growth with richer multiples.
As usual, I’ll probably get some insults for disagreeing with the community. But I’m looking forward for constructive criticism on what I’m wrong on or missing in the story.
Maybe new features are coming as that's often the case with growth companies and if so I'll have the same conclusion than for $PATH: let me see demand and then I'll change my mind. For now, I do not see what would justify multiples expansion.
I’ve heard @wealthmatica is the $ZETA king, so if you’re reading, I’d be glad to hear counterarguments or be pointed toward content with answers.
In the meantime, everything was written with respect and arguments, so if you feel like commenting, try to do the same 🙏.
We're here to make money together, not insult each others.
tweet
Offshore
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EndGame Macro
When Low Claims Stop Meaning What They Used To
At face value, this chart makes the labor market look calm. Claims are low, layoffs aren’t accelerating, and the line is drifting back toward levels we usually associate with stability. If you only lived inside this metric, you’d think the job market is holding up just fine.
But this number comes from a system that no longer reflects how people actually work.
Why Claims Look Strong Even When Workers Aren’t
Unemployment insurance was designed for a W-2 world. Today, a huge share of workers don’t fit that mold. Gig workers, contractors, self employed folks, they don’t qualify for traditional UI, so when their income disappears, nothing shows up here. And even for people who are eligible, the benefit is often too small and too frustrating to be worth the process. A lot of people simply skip filing and go straight into hustling on the apps to stay afloat.
Add in messy classification…people with unstable hours still get counted as “employed” and you end up with an indicator that captures layoffs, but not the broader slowdown underneath them.
That’s why the line stays low even while credit delinquencies rise and households start missing payments. The stress is real; the claims just don’t pick it up until much later in the cycle.
What’s Actually Happening Beneath the Surface
If you connect this chart to everything else we’re seeing, the higher probability story is pretty clear.
Companies are tightening, but quietly. They’re cutting hours, freezing hiring, pushing work toward contractors, and trimming the edges instead of doing the big, headline grabbing layoff waves. Workers who lose a steady job plug the gap with gig income, which technically makes them “not unemployed,” but definitely not secure.
So claims look great. The lived experience doesn’t.
This isn’t a healthy labor market, it’s a stretched one. A labor market where people are working more jobs with less stability, where falling income volatility gets mistaken for strength, and where the early warning signs show up in credit data long before they show up in claims.
Credit to @charliebilello for the great chart. Give him a follow.
tweet
When Low Claims Stop Meaning What They Used To
At face value, this chart makes the labor market look calm. Claims are low, layoffs aren’t accelerating, and the line is drifting back toward levels we usually associate with stability. If you only lived inside this metric, you’d think the job market is holding up just fine.
But this number comes from a system that no longer reflects how people actually work.
Why Claims Look Strong Even When Workers Aren’t
Unemployment insurance was designed for a W-2 world. Today, a huge share of workers don’t fit that mold. Gig workers, contractors, self employed folks, they don’t qualify for traditional UI, so when their income disappears, nothing shows up here. And even for people who are eligible, the benefit is often too small and too frustrating to be worth the process. A lot of people simply skip filing and go straight into hustling on the apps to stay afloat.
Add in messy classification…people with unstable hours still get counted as “employed” and you end up with an indicator that captures layoffs, but not the broader slowdown underneath them.
That’s why the line stays low even while credit delinquencies rise and households start missing payments. The stress is real; the claims just don’t pick it up until much later in the cycle.
What’s Actually Happening Beneath the Surface
If you connect this chart to everything else we’re seeing, the higher probability story is pretty clear.
Companies are tightening, but quietly. They’re cutting hours, freezing hiring, pushing work toward contractors, and trimming the edges instead of doing the big, headline grabbing layoff waves. Workers who lose a steady job plug the gap with gig income, which technically makes them “not unemployed,” but definitely not secure.
So claims look great. The lived experience doesn’t.
This isn’t a healthy labor market, it’s a stretched one. A labor market where people are working more jobs with less stability, where falling income volatility gets mistaken for strength, and where the early warning signs show up in credit data long before they show up in claims.
Credit to @charliebilello for the great chart. Give him a follow.
tweet
Offshore
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EndGame Macro
When Prices Outrun Rents, History Tells You What Happens Next
This is the simplest way to see whether housing is expensive or reasonable. It compares home prices to rents going all the way back to 1980. When the line rises, it means home values are running ahead of the actual cash flow value of shelter. When it falls, either prices are cooling or rents are catching up.
And you can see the pattern instantly…every time this ratio shoots too far above normal, it eventually comes back down. The early 80s did it. The late 80s did it. The mid 2000s did it in dramatic fashion. After each spike, the chart doesn’t just drift back toward average, it slides below it before stabilizing. Housing moves like a pendulum, not a ruler.
Now look at today. We’re clearly in elevated territory again. Not at the 2006 insanity, but definitely above the long run median and nowhere near the downturn lows that usually mark the end of a cycle.
Where This Usually Goes Next
If history is any guide, this ratio isn’t going to sit up here forever. It tends to revert to the mean in one of two ways: quickly during a hard correction, or slowly through time as prices flatten and rents and incomes inch higher.
Given the current mix of high mortgage rates, owners locked into cheap pre 2022 loans, affordability stretched to the breaking point, and very little transactional volume, the slow grind version is more likely. You don’t need a 2008 style collapse for this ratio to fall. You just need a few years where home prices stop running and rents do the heavy lifting.
But the direction is the same either way. If the chart keeps behaving the way it always has, valuations will drift back toward the low 14s, and probably into the 12s at the bottom of the cycle. That’s what normalization looks like in housing: not necessarily dramatic price drops, but a multi year adjustment where reality eventually wins out over the last bubble’s momentum.
tweet
When Prices Outrun Rents, History Tells You What Happens Next
This is the simplest way to see whether housing is expensive or reasonable. It compares home prices to rents going all the way back to 1980. When the line rises, it means home values are running ahead of the actual cash flow value of shelter. When it falls, either prices are cooling or rents are catching up.
And you can see the pattern instantly…every time this ratio shoots too far above normal, it eventually comes back down. The early 80s did it. The late 80s did it. The mid 2000s did it in dramatic fashion. After each spike, the chart doesn’t just drift back toward average, it slides below it before stabilizing. Housing moves like a pendulum, not a ruler.
Now look at today. We’re clearly in elevated territory again. Not at the 2006 insanity, but definitely above the long run median and nowhere near the downturn lows that usually mark the end of a cycle.
Where This Usually Goes Next
If history is any guide, this ratio isn’t going to sit up here forever. It tends to revert to the mean in one of two ways: quickly during a hard correction, or slowly through time as prices flatten and rents and incomes inch higher.
Given the current mix of high mortgage rates, owners locked into cheap pre 2022 loans, affordability stretched to the breaking point, and very little transactional volume, the slow grind version is more likely. You don’t need a 2008 style collapse for this ratio to fall. You just need a few years where home prices stop running and rents do the heavy lifting.
But the direction is the same either way. If the chart keeps behaving the way it always has, valuations will drift back toward the low 14s, and probably into the 12s at the bottom of the cycle. That’s what normalization looks like in housing: not necessarily dramatic price drops, but a multi year adjustment where reality eventually wins out over the last bubble’s momentum.
Bubble. https://t.co/0SRjg3WU5L tweet
Offshore
Photo
EndGame Macro
There are definitely people milking fear for clicks. But there are also people just trying to describe the world as it actually is with record debt, broken housing ladder, widening wealth gaps, geopolitical mess. Calling that doomerism doesn’t fix any of it; it just makes honest discussion sound illegitimate.
Being willing to see fragility in the system is situational awareness. You can be optimistic about human ingenuity and skeptical that this particular setup ends smoothly.
The opposite of doom is clear eyed realism plus the willingness to act anyway.
tweet
There are definitely people milking fear for clicks. But there are also people just trying to describe the world as it actually is with record debt, broken housing ladder, widening wealth gaps, geopolitical mess. Calling that doomerism doesn’t fix any of it; it just makes honest discussion sound illegitimate.
Being willing to see fragility in the system is situational awareness. You can be optimistic about human ingenuity and skeptical that this particular setup ends smoothly.
The opposite of doom is clear eyed realism plus the willingness to act anyway.
A Respectful Open Post to All the Doom & Gloomer Pussies
I’m 50 years old. As of two years ago, I had never spent time on any social media--none.
I just never participated.
Then I wrote a book called Quoz, about a future where AI and Quantum computing ruled the world, https://t.co/jLMdOPzkSr.
My distributor, @simonschuster, suggested I get on social media; so I did, never expecting anyone to follow me.
Within a year or two, I got over 35K followers somehow, I really don’t know why.
But here’s what I’ve learned. Fuck all the, “I’m optimistic at heart, but…” people.
Either you’re an optimist or not. Either you think we’re heading for better days, or you don’t.
I’m beginning to work on a longer, mini-manifesto that I call “The Good, the Bad, & the Ugly.”
The “good” is all the possibility that is around us at this moment in time. It’s AI, humanoids, the breakdown of racial/ethnic barriers to advancement (& I'm not woke but a DJT voter).
The “bad” is the undeniable setbacks that we need to overcome… and overcome them we will… things like large sovereign debt, social wealth inequality, etc.
But the most interesting to me, and the most important for success, is overcoming the “Ugly.”
The Ugly is all the people on social media and elsewhere that want to convince everyone that they are victims… victims of racism, sexism, generationalism, etc.
These are the people that constantly put out videos/pods on YouTube about the coming collapse, “Worse than the Depression,” the “Markets Set for Massive Meltdown” people, etc. And yes, @thoughtfulmoney, I'm talking about you. I will not hesitate to name names.
I know this is not a popular view. The popular view is that through some magic of the printing press, the powers that be have forced everyone into a death spiral that will end badly.
I want to push back against this narrative. Attitude is everything. If everyone starts believing they are just victims of circumstance, and that in the end, everything will end in collapse, then that belief becomes toxic.
I also firmly believe that that belief is categorically wrong.
I’m hoping to publish by Jan a well-reasoned and thoughtful piece that confronts all the bad attitudes out there. That promotes optimism without a but.
I was pretty down last week as my “optimistic” portfolio hit a snag.
Then, I had the best week, on an absolute dollar amount of my life, up over $300K.
Do not let the Doomers get you down. We are on an upward trajectory. It is only a matter of perspective.
All the Puritanical regret about wealth creation is an abomination.
It is a deep-seated attempt to make people feel bad about making money.
It is a denial of the world and the way it is, a hopeful wish for some puritanical world of fair and justness that simply does not exist.
Follow that philosophy at you're own peril! tweet
Offshore
Video
Clark Square Capital
RT @deusexdividend: Me fighting all the moms at Target for the latest Toniebox 2 $TNIE
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RT @deusexdividend: Me fighting all the moms at Target for the latest Toniebox 2 $TNIE
Me fighting all the moms at Target to get the last Bluey stuffed animal today https://t.co/rNeDNd1XGP tweet
Offshore
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: A quality valuation analysis on $META 🧘🏽♂️
•NTM P/E Ratio: 19.89x
•3-Year Mean: 22.75x
•NTM FCF Yield: 1.50%
•3-Year Mean: 3.20%
As you can see, $META appears to be trading below fair value on an earnings multiple
Going forward, investors can expect to receive ~14% MORE in EPS & ~53% LESS in FCF per share🧠***
Before we get into valuation, let’s take a look at why $META is a quality business
BALANCE SHEET✅
•Cash & Equivalents: $44.45B
•Long-Term Debt: $28.34B
$META has an excellent balance sheet, an AA- S&P Credit Rating & 112x FFO Interest Coverage Ratio
RETURN ON CAPITAL✅
•2021: 33.7%
•2022: 22.0%
•2023: 25.7%
•2024: 29.4%
•LTM: 32.9%
RETURN ON EQUITY✅
•2021: 31.1%
•2022: 18.5%
•2023: 28.0%
•2024: 37.1%
•LTM: 32.6%
$META has great return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2020: $85.97B
•2025E: $199.46B
•CAGR: 18.33%
FREE CASH FLOW✅*
•2020: $23.58B
•2025E: $41.47B
•CAGR: 11.95%
•2028E: $74B*
NORMALIZED EPS✅
•2020: $10.09
•2025E: $25.99
•CAGR: 20.83%
SHARE BUYBACKS✅
•2019 Shares Outstanding: 2.88B
•LTM Shares Outstanding: 2.59B
By reducing its shares outstanding ~10%, $META increased its EPS by ~11% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 82.0%
•LTM Operating Margins: 42.6%
•LTM Net Income Margins: 30.9%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~14% MORE in EPS & ~53% LESS in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $META has to grow earnings at a 9.95% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2026 - 2028 EPS growth over the next few years to be slightly less than the (9.95%) required growth rate:
2025E: $25.99 (9% YoY) *FY Dec
2026E: $30.31 (17% YoY)
2027E: $33.55 (11% YoY)
2028E: $35.02 (4% YoY)
$META has a decent track record of meeting analyst estimates ~2 years out, so let’s assume $META ends 2028 with $35.02 in EPS & see its CAGR potential assuming different multiples
24x P/E: $840💵 … ~12.2% CAGR
23x P/E: $805💵 … ~10.6% CAGR
22x P/E: $770💵 … ~9.1% CAGR
21x P/E: $735💵 … ~7.5% CAGR
20x P/E: $700💵 … ~5.8% CAGR
As you can see, $META appears to have double-digit CAGR potential if we assume >23x earnings, a multiple near its 3-year mean and a multiple that’s potentially justified given its growth rate, balance sheet, visionary leadership & AI-related investments
As I’ve mentioned before: “… the increased investment in future growth and necessary Al development, which has the potential to lead to better growth prospects, should be viewed with a bullish tone rather than a bearish one” — (which can lead to a sustainable re-rating over the next few years)
Today at $594💵 $META appears to be slightly undervalued, those buying today have a small margin of safety and will not need to rely on margin expansion
I consider $META a great buy ~$535💵, offering ~11% CAGR assuming a conservative 21x 2028 EPS est
#stocks #investing
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️
𝐓𝐡𝐢𝐬 𝐜𝐨𝐧𝐭𝐞𝐧𝐭 𝐢𝐬 𝐩𝐫𝐨𝐯𝐢𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐚𝐧𝐝 𝐞𝐝𝐮𝐜𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐝𝐨𝐞𝐬 𝐧𝐨𝐭 𝐜𝐨𝐧𝐬𝐭𝐢𝐭𝐮𝐭𝐞 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞, 𝐚𝐧 𝐨𝐟𝐟𝐞𝐫, 𝐨𝐫 𝐚 𝐬𝐨𝐥𝐢𝐜𝐢𝐭𝐚𝐭𝐢𝐨𝐧 𝐭𝐨 𝐛𝐮𝐲 𝐨𝐫 𝐬𝐞𝐥𝐥 𝐚𝐧𝐲 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐲.
𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐨𝐥𝐝 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝. 𝐀𝐧𝐲 𝐨𝐩𝐢𝐧𝐢𝐨𝐧𝐬 𝐞𝐱𝐩𝐫𝐞𝐬𝐬𝐞𝐝 𝐚𝐫𝐞 𝐚𝐬 𝐨𝐟 𝐭𝐡𝐞 𝐝𝐚𝐭𝐞 𝐨𝐟 𝐩𝐮𝐛𝐥𝐢𝐜𝐚𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐬𝐮𝐛𝐣𝐞𝐜𝐭 𝐭𝐨 𝐜𝐡𝐚𝐧𝐠𝐞 𝐰𝐢𝐭𝐡𝐨𝐮𝐭 𝐧𝐨𝐭𝐢𝐜𝐞.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲 𝐨𝐫 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫[...]
RT @DimitryNakhla: A quality valuation analysis on $META 🧘🏽♂️
•NTM P/E Ratio: 19.89x
•3-Year Mean: 22.75x
•NTM FCF Yield: 1.50%
•3-Year Mean: 3.20%
As you can see, $META appears to be trading below fair value on an earnings multiple
Going forward, investors can expect to receive ~14% MORE in EPS & ~53% LESS in FCF per share🧠***
Before we get into valuation, let’s take a look at why $META is a quality business
BALANCE SHEET✅
•Cash & Equivalents: $44.45B
•Long-Term Debt: $28.34B
$META has an excellent balance sheet, an AA- S&P Credit Rating & 112x FFO Interest Coverage Ratio
RETURN ON CAPITAL✅
•2021: 33.7%
•2022: 22.0%
•2023: 25.7%
•2024: 29.4%
•LTM: 32.9%
RETURN ON EQUITY✅
•2021: 31.1%
•2022: 18.5%
•2023: 28.0%
•2024: 37.1%
•LTM: 32.6%
$META has great return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2020: $85.97B
•2025E: $199.46B
•CAGR: 18.33%
FREE CASH FLOW✅*
•2020: $23.58B
•2025E: $41.47B
•CAGR: 11.95%
•2028E: $74B*
NORMALIZED EPS✅
•2020: $10.09
•2025E: $25.99
•CAGR: 20.83%
SHARE BUYBACKS✅
•2019 Shares Outstanding: 2.88B
•LTM Shares Outstanding: 2.59B
By reducing its shares outstanding ~10%, $META increased its EPS by ~11% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 82.0%
•LTM Operating Margins: 42.6%
•LTM Net Income Margins: 30.9%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~14% MORE in EPS & ~53% LESS in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $META has to grow earnings at a 9.95% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2026 - 2028 EPS growth over the next few years to be slightly less than the (9.95%) required growth rate:
2025E: $25.99 (9% YoY) *FY Dec
2026E: $30.31 (17% YoY)
2027E: $33.55 (11% YoY)
2028E: $35.02 (4% YoY)
$META has a decent track record of meeting analyst estimates ~2 years out, so let’s assume $META ends 2028 with $35.02 in EPS & see its CAGR potential assuming different multiples
24x P/E: $840💵 … ~12.2% CAGR
23x P/E: $805💵 … ~10.6% CAGR
22x P/E: $770💵 … ~9.1% CAGR
21x P/E: $735💵 … ~7.5% CAGR
20x P/E: $700💵 … ~5.8% CAGR
As you can see, $META appears to have double-digit CAGR potential if we assume >23x earnings, a multiple near its 3-year mean and a multiple that’s potentially justified given its growth rate, balance sheet, visionary leadership & AI-related investments
As I’ve mentioned before: “… the increased investment in future growth and necessary Al development, which has the potential to lead to better growth prospects, should be viewed with a bullish tone rather than a bearish one” — (which can lead to a sustainable re-rating over the next few years)
Today at $594💵 $META appears to be slightly undervalued, those buying today have a small margin of safety and will not need to rely on margin expansion
I consider $META a great buy ~$535💵, offering ~11% CAGR assuming a conservative 21x 2028 EPS est
#stocks #investing
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𝐓𝐡𝐢𝐬 𝐜𝐨𝐧𝐭𝐞𝐧𝐭 𝐢𝐬 𝐩𝐫𝐨𝐯𝐢𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐚𝐧𝐝 𝐞𝐝𝐮𝐜𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐝𝐨𝐞𝐬 𝐧𝐨𝐭 𝐜𝐨𝐧𝐬𝐭𝐢𝐭𝐮𝐭𝐞 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞, 𝐚𝐧 𝐨𝐟𝐟𝐞𝐫, 𝐨𝐫 𝐚 𝐬𝐨𝐥𝐢𝐜𝐢𝐭𝐚𝐭𝐢𝐨𝐧 𝐭𝐨 𝐛𝐮𝐲 𝐨𝐫 𝐬𝐞𝐥𝐥 𝐚𝐧𝐲 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐲.
𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐨𝐥𝐝 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝. 𝐀𝐧𝐲 𝐨𝐩𝐢𝐧𝐢𝐨𝐧𝐬 𝐞𝐱𝐩𝐫𝐞𝐬𝐬𝐞𝐝 𝐚𝐫𝐞 𝐚𝐬 𝐨𝐟 𝐭𝐡𝐞 𝐝𝐚𝐭𝐞 𝐨𝐟 𝐩𝐮𝐛𝐥𝐢𝐜𝐚𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐬𝐮𝐛𝐣𝐞𝐜𝐭 𝐭𝐨 𝐜𝐡𝐚𝐧𝐠𝐞 𝐰𝐢𝐭𝐡𝐨𝐮𝐭 𝐧𝐨𝐭𝐢𝐜𝐞.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲 𝐨𝐫 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫[...]
Offshore
Dimitry Nakhla | Babylon Capital® RT @DimitryNakhla: A quality valuation analysis on $META 🧘🏽♂️ •NTM P/E Ratio: 19.89x •3-Year Mean: 22.75x •NTM FCF Yield: 1.50% •3-Year Mean: 3.20% As you can see, $META appears to be trading below fair value on an earnings…
𝐦𝐚𝐧𝐜𝐞 𝐝𝐨𝐞𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
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