[00:00] This is the biggest performance jump to date, putting it on par with competitors like Opening Eye and Anthropic. Five days ago, we made a video right here called Why Metastock is About to Violently Skyrocket.
[00:14] That was on August 28th, when Metastock closed for about $5.77. It's up 7% from there in just the last five days. And keep in mind, we had a weekend to get through.
[00:27] So, what's happening at Meta? Well, the suits are really starting to change their tune on Meta, and some of the good news coming from Meta could be even better than expected.
[00:39] We have to temper some enthusiasm, and obviously nothing in this video is personalized financial advice, but let's just be clear, historic volatility right now on Meta is on the lower side.
[00:51] It's below average, which has a good setup, and there is a risk that the enthusiasm over the stock could end up being misplaced because maybe the products they come out with don't end up monetizing.
[01:05] But there are a lot of potential reasons to be excited. If you go into our Stock AI tab, and I'm going to give you a real updated bullish price target on this, but if you go into our Stock AI tab, we've got in our course membership a fair value sitting at almost $1,100 for this.
[01:22] I actually think the forecast here undersells the real potential growth rate with some of these new products coming from Meta. In addition to that, if you scroll down a little bit more in our course number tab,
[01:35] you'll find the historic volatility graph for Meta. This is really important because it indicates that right now historic volatility is on the low end, which is generally where you want to buy options.
[01:47] You usually want to sell options high. It's very similar to buy low, sell high. In fact, this morning, when Tesla was up like 1.6% in the course number live stream, We said, today's the day.
[02:00] Tesla could rocket. Historic volatility is lower than average. Maybe getting a little close to that point. But on an event day, it should be way higher than this. And there's a real potential Tesla has a big rocket ship coming soon.
[02:15] Well, since the market opened, we've got to pat ourselves on the back a little bit. But Tesla is up 7 freaking percent. And we told course members about this right here on the Intraday Trade.
[02:28] If you want to be part of this, make sure you join us in the Alpha membership. Use that coupon code EXPIRING TOMORROW, brief extension on J-Hole. Now, let's talk about this, like what's changing with the suits. First of all, we already covered that Meta has this major catalyst overhang behind it
[02:46] regarding the lawsuits, the settlement that they engaged regarding time restrictions for youth. Some of the suits actually argue will end up being worse for a company like Google via YouTube than it will be for Meta.
[02:59] So the lawsuit overhang, we already talked about that. We also already talked about the potential for Meta to monetize some of their artificial intelligence. But there are new components that we have to sort of add to that list.
[03:14] So if we kind of jump to making a list over here, the fact that the lawsuits, there are still some private lawsuits related to social media, but the major Department of Justice and Associated Attorney General's lawsuits,
[03:28] that being settled, pretty good. So we got that lawsuit risk. We got the potential of monetizing compute strategically if they get really good deals, right? Those we already know.
[03:40] That's the old news that goes into our older thesis. What's the new news? Well, the new news is the following. There are press reports that in early September, Meta could launch its own consumer-focused AI agent called Hatch.
[03:55] And this is potentially going to run somewhere around $199 per month at the highest tier. Now, Meta has also switched to using Slack, which is fascinating to me because we're Salesforce investors and Slack is owned by Salesforce.
[04:13] Take a look at this. So if you jump it over here, Meta is switching to Slack because it says it's better for AI agents. And they're doing this conveniently right before this plan.
[04:26] Three months ago, Meta started selling access to its AI chatbot for $7.99 per month. Now the information it's reporting, that could potentially go up to a plan as high as $199 per month.
[04:39] Meta plans to launch Hatch, AI agent platform, in the coming weeks, followed by their Watermelon Frontier AI model in October. So we've got some really big catalysts coming here for Meta
[04:52] that markets maybe are paying attention to, but I don't think so. And I'll show you why valuation-wise in just a moment. But Hatch is part of Zuckerberg's ambitions to monetize the company's enormous AI investment, diversifying its revenue beyond advertising.
[05:06] It's important. I actually think that Meta is kind of like paying less than what Anthropic is going to IPO for, but you get a whole advertising business that's profitable with it.
[05:18] Because Meta's at like a $1.5 trillion valuation, Anthropic will probably go out at like $2 billion. And it doesn't have the profitable core advertising business that Meta has. And so if Meta comes in with a competing product to Anthropic, like its own version of OpenClaw,
[05:33] a lot of people think that could be a game-changing catalyst for Meta. Now, maybe it's just not going to be as good. Maybe it'll flop. Who knows? Well, let's take a look at more of this. The information previously reported that Meta might charge up to $199 for a premium monthly subscription for that product that would include higher usage limits.
[05:49] Hatch might be trained to access websites such as DoorDash, Etsy, Reddit, Yelp, and Outlook. Based on prototypes, it'll have a customizable dashboard to display tools and skills created by agents like fitness trackers or itinerary travel
[06:02] and is expected to launch late August or early September. since late August is now behind us and we are in early September we are in the perfect window for this Meta is also gearing up to release its platform on WhatsApp that would allow users to integrate other AI agents with the chatbot directly Now this is very similar to actually
[06:21] what Slack is doing, which Meta is now using. This is a Salesforce company. But Slack basically allows you to chat with coding agents directly inside of Slack, removing the need to go to ChatGPT or Cloud.com, for example.
[06:35] Instead, just talking to chatbots directly in your Slack window, this is beneficial, obviously, to Salesforce, we have exposure to both of these stocks. So in fairness, I just want to put that bias out there.
[06:47] This is useful because it potentially means, hey, if you can get people to utilize, you know, this conversational AI directly in your platform, you end up with more potential control.
[06:59] And I think Meta, even though they use Slack and they're getting away from Google Chat, I think they're switching to use Slack to build a very similar platform that Slack has built for Meta agents.
[07:13] I almost think they're kind of like infiltrating. It's like, let's use them for all of our employees to use all the good things there, and then let's make something like that. That's a little bit jaded towards the Salesforce outlook, but I think that's possible.
[07:27] But anyway, looking at some of the other arguments here, Meta is also accelerating its plans to release its upcoming Frontier model to compete with OpenAI and Anthropic. This is in addition to the open weight models that they're still rapidly developing.
[07:41] So they want both the closed weight strategy to compete with China, or sorry, the open weight strategy to compete with China, and then also the closed weight models to compete with OpenAI and AdDropit. I also have this thesis that in the long term, these, you know, how should I put it?
[07:58] the race for customers and annual recurring revenue isn't actually going to come from who has the best model. I think it's going to be who has the best and easiest to use software for building agents.
[08:12] Like if, you know, UiPath, for example, can make it really easy for companies to set up robotic path optimization or, you know, orchestration and incorporate LLMs, people are going to use that.
[08:24] If Facebook can have a more user-friendly version of creating bots like a Grok bot, that's beneficial. That's where a moat comes in. So these are upcoming catalysts, and they align with this argument that in the long term, people won't care what model it is.
[08:43] They just want to get their work done in the easiest and most efficient manner. And the platform that can capture that attention or capture those businesses wins. Facebook captures a lot of businesses because of the Facebook advertising sort of flywheel that occurs.
[08:56] That flywheel is critical. We actually talk about that flywheel. I drew it out right here. There it is. Basically, you advertise to people who are scrolling, and you pitch them new products that get advertised,
[09:11] but your AI chatbot can also answer questions about those same advertised products. But you also need to throw in this that S&Bs are the ones advertising, and they're in the Facebook platform,
[09:24] who are obviously not just Facebook, but also Instagram or WhatsApp or otherwise. So now what you have is you have the lawsuit catalyst. You have the monetization catalyst of compute, right? So that's of compute.
[09:37] All right, that guy's going in the trash. Then on top of that, you have watermelon, which I'm not going to hold my breath on the frontier levels, but what you also have is hatch
[09:50] you know the hatch call it I don't know I would guess it's going to be like 49 to 199 if I had to guess something of that range and you get sort of that add flywheel that comes with that
[10:02] so plus add flywheel that we just addressed so these are some really cool catalysts coming to Metastar so what do these suits say
[10:14] and, you know, beyond just Kevin's opinion here. And then, obviously, what are the risks as well to this company? So, first, they say Meta could launch its consumer-focused Hatch. Hatch operates through its own virtual computer
[10:26] and can browse websites and navigate various UIs to perform autonomous tasks for users, enabling it to perform activities such as online purchases, restaurant booking, forum completion, email, text communication, and it adapts over time, blah, blah, blah, plus the October launch of Watermelon.
[10:39] Consumer-agentic AI adoption is at an early stage, and Hatch needs to be functional and differentiated from OpenAI and Gemini. So in other words, you have to be better. You have to be easier to use. You have to be more useful.
[10:51] You have to build more trust, which that might be an asterisk for Meta. And then, of course, you have to make it accessible on a pricing model for people. So if they can pull off all those things, Bank of America is actually quite bullish.
[11:03] They think that Meta's AI right now has very limited user activity to GPT and Gemini, and that overall sentiment is really cautious on Meta. That is actually somewhat bullish on this catalyst list, because if you go in here and then you write in low expectations, low expectations plus low volatility, more bullish catalysts.
[11:28] Let's... Okay. So, then we look at... This was on the frontier stuff. This was the cycle or the flywheel we talked about.
[11:40] Then if we compare to Google, take a look at this. Here's a Bernstein piece that suggests that meta will take over Google search. Now, there's been a lot of rumoring that Google is actually purposely pumping a whole lot more ads into Google than ever before.
[11:56] Let's just do a live search right now. I'm going to type in, I don't know, what do I want to buy? Purchase toys for kids Christmas. Okay, I'm just going to throw that in. I would never actually throw a search in like that.
[12:10] But a lot of people are saying that Google is getting way more aggressive because they see this revenue area. Vertical is actually getting crushed by AI. They're showing growth in their earnings by placing more ads
[12:22] and pricing their ads higher, basically squeezing the people they have for more money I don know if that true because you know ad revenue is growing 19 at Google in the search business But there is a jaded outlook that Google is actually just squeezing the sponge of the people they have with more ads and pricier ads
[12:41] And that those people eventually might end up getting frustrated because the results just aren't what they expect. But here you can see sponsored results, featured products. These presumably are all sponsored because it's under the sponsored results tab.
[12:53] But it's getting hard to tell now. Like, all of these are sponsored. Lego sponsored, Harry sponsored, Oriental training, all of these are sponsored. So look at this. Like, it used to be you'd have, like, one or two sponsored results.
[13:05] Now this whole banner is sponsored, that's sponsored, that's sponsored, that's sponsored. You have to click hide sponsored results to get rid of it. Then you get Target. Then you get deals on toys over here. Popular products.
[13:17] Okay, that's fine. If you keep scrolling, I don't know who's going to scroll all the way down here. But look at this. They've done this now. Sponsored results halfway down the page now. You get sponsored results again. You didn't used to have that. It used to be sponsored, and then you'd get through the organic results, and that's it. Now you got sponsored mid-page. Then you get frequently asked questions, whatever, maybe the non-sponsored ones over here. Keep scrolling, keep scrolling, and that's it.
[13:43] So they've added sponsored results at more locations. So they've actually made it even harder to see if something's an ad. Because, look, here they go, sponsored results. It used to be that these things would have a little blue box right about here,
[13:57] and it would say ad, right? Each of these would be like ad, ad, ad. Now, that looks no different from a regular, like, a target thing. I can't tell that that's an ad and that is not an ad,
[14:12] other than this little sponsored result bar right here. But, you know, a regular consumer who's not actively trying to look for that might not notice there's actually a difference. They might think that just these things are sponsored, but it turns out these websites apparently are too.
[14:26] So, anyway, that's the argument that there's a squeeze going on at Google, and that's how they're trying to catch up. You can see that actually in Google's revenue right here. Google's advertising revenue is up 20% in search and other, which is good.
[14:39] That's great. That's still good. But how much of that is driven by the squeeze that's going on, we don't know. What we do know is that Meta's advertising revenue in the three months ending March was up 32.9%.
[14:51] So advertising revenue had a nice boost over here. A downside of Meta is their costs are getting squeezed right now. Their research and development spending is up 67%, while their revenue is only up 27.9%.
[15:05] Now, they're still massively profitable, but their net income actually declined from $18 billion to $15.8 billion. And so it's kind of time for Meta to show the market that they could actually generate a return on investment. Otherwise, the selling that we've seen in Meta stock is justified
[15:20] because they're not able to show an ROI. Here you can see Meta stock has been in between this wedge here. My belief is that the low for the stock is $5.44. That's where we fell to a low on the Leopold day when he got liquidated.
[15:35] And I believe once we break out of this downtrend right here, which I think we'll violently break out of, this will be an 828 stock soon, but that's not actually my terminal forecast for this company. So my forecast for this company is that on an earnings per share basis, let's go to our Meet Kevin app.
[15:54] So let's go in here, app.meetkevin.com. Remember, you can actually download the Meet Kevin app for free, but there are some components that are only for course members. If you download the Meet Kevin app, you can download it for free in the Google and Android app store.
[16:06] Download the app. Sign up with your course member. Sign up with your course member email address. After you log in into the app first, you can actually use the web app as well. You can then use the same email to go into the web app, which I think is kind of cool.
[16:19] So let's go into the course member side on meta here, and let's see what we've got. So meta platforms. This is the current forecast. I have a more bullish thesis on this.
[16:31] I'm going to pull that in my Kevin's Notes page right here. So take a look at this. I want you to see this. Growth estimates right now are only set for 8.52% next year for Meta for the year ending December 2027.
[16:44] That's a very, very low. I don't know why, but those are literally the Wall Street estimates right now for EPS growth. Maybe because they see more CapEx spending, more research and development spending, and sort of that old classic, you know,
[16:58] spending like a drunken sailor idea. But they have the cash flow, unlike companies like opening I in a drop-in. I mean, to be determined, I suppose,
[17:10] given that, you know, this is public and they're not. But anyway, to me, that seems super low. And I think this is a mistake. So when I look at a peg ratio for meta right now, I see the current peg ratio at just 1.12%.
[17:23] The four-year average forecast, actually including the whole of 8.52, is 15.6% growth. If you actually bump this to 20%, which I think could be realistic if they start monetizing
[17:38] agentic AI and, you know, some of their other AI subscriptions, they actually become sort of a, they actually have a Gemini moment. I'll show you the price in just a moment. The price target could be much higher. But I want you to see this.
[17:51] Before I finish the Bernstein piece, look over here. this right here is a piece by Morgan Stanley Morgan Stanley piece on Meta for now Meta could this be the product innovation
[18:03] floodgate opener like Google last year remember last year when there was a big Gemini moment we might see a Gemini moment for Meta now obviously none of this is personalized financial rights because I don't know your situation
[18:16] I have exposure to this so maybe I'm biased it's entirely possible that this model flops and then that's going to be left hold of the bag on a lot of spending. In fairness, okay,
[18:29] if these low expectations prove right and Hatch sucks, right, what is the catalyst that they have as the ultimate fallback Let assume Hatch sucks The as wheel is going to keep going Low expectations end up proven correct Low vol stays low vol Fine
[18:50] Watermelon? Screw it. Flop too. What's the ultimate fallback? Right here, baby. The monetization of compute. So, in other words, if their monetization of
[19:02] AI fails with models and software, they can monetize it through artificial intelligence ad enhancements, more on that in a moment, but also they could just sell the excess computer
[19:14] to answer all the ticket opening odds, which none of that is in my opinion priced into the stock right now. Okay, so that means I think the stock in it has, and this could end up being conservative
[19:27] because after momentum it could go even further, but in our course number tab, to me, that puts them at a nearly $1,867 price target, which is a 3x from here. That puts them at
[19:43] about a $4.5 trillion company, which is literally where Google, Apple, and NVIDIA essentially sit right now. NVIDIA's a little over $5, Google's a little under that right now. And it puts you close to the about $3.5 trillion level that you've got with Tesla and SpaceX.
[19:59] So, like, all of these guys are sitting really elevated on their valuations. Obviously, the problem is debt. Off-sheet, balance sheet debt is a potential risk.
[20:13] This is, as reported by the Nikkei, a lot of these are including cancelable risks. so there is a risk of, hey, what's going on with, you know,
[20:25] cancelable off-balance sheet debt and partnerships for data centers like the Blue Owl Data Center and otherwise. So, yeah, there's still some risk. This is not a riskless play.
[20:39] And monetizing compute here is going to be critical to justify that debt that exists out there. But let's look at another way Meta can actually monetize artificial intelligence. It is right here. Okay?
[20:52] I have personally considered artificial intelligence a boom for ads, but I hadn't considered this. Meta, the biggest AI winner in digital ads. Meta arguably has seen the largest impact from AI on ad growth, on track to surpass Google Search this year.
[21:06] Remember, Google Search is at about $60 billion, and Meta ads are at $55 billion. Anyway, excluding other ad revenues, including Maps and Gmail, we suspect Meta may have already caught up to Google Search.
[21:18] But unlike search, where users explicitly signal intent, like toys for kids, right? Meta must predict what content and ads users are more likely to engage with, making artificial intelligence-driven improvements in content recommendations,
[21:32] targeting and ad measurement, incrementally more beneficial for Meta. So in other words, Meta has more to win from artificial intelligence than Google in the advertising business. Now, I don't think that Meta is the only advertising play you can make.
[21:46] Meta has negative cash flow. It really has to prove the monetization of AI, and it has not yet. Netflix is an advertiser that has a 3.7% free cash flow yield, and Applovin, I've exposed it in all these, just in fairness, okay,
[21:59] full transparency, has a free cash flow yield of 4.8%. So there are some, you know, this is a full-stack advertising set right here, unlike Trade Desk, which unfortunately, you know, is showing declining revenues,
[22:14] which we've also talked about regularly in a course number last year. So, putting all of this together, there is some unique enthusiasm that we're now seeing getting pushed for meta
[22:27] that may just be catching a bid in public markets. These meta plans, as reported by, you know, the Information or Business Insider or whatever,
[22:40] a lot of this is a potential game-changing catalyst, or it's not. And that's where I think the downside of this stock still sits around 544.
[22:53] So we're not too far away from the downside. Obviously, if there's a recession, everything goes down a whole lot more. But I think we're much closer to upside catalysts turning into a reality than we are downsides. And we haven't even talked about how enthusiastic I am about the Metaglass.
[23:11] But I've talked about that enough in other videos and Instagram stories. You can always follow me on Instagram at meetkevin on Instagram, not realmeetkevin on Instagram. But what's much more interesting to me for now is that you can still get into that J-Hole coupon code for our Homes AI product.
[23:30] Lifetime access is going away for this at 11.59 p.m. tomorrow. that's it. It'll turn into a subscription-based service and you won't have lifetime access anymore. So if you buy the lifetime access before that, you will keep lifetime access
[23:43] forever. But you can't access it anymore unless you get into it before Friday. What a lot of people are doing is they are bundling the Meet Kevin Alpha membership, which is through all of the nine courses, every trade alert, every portfolio adjustment, allocations to
[23:58] the portfolio, every private live stream, every alpha report. Tax professionals say It could be a tax write-off. You get all of this and all of the nine courses all in one alpha membership. You join that and get a license to do this.
[24:11] A lot of people are bundling this with the reinvest membership. And if you're already a member and haven't bundled it yet and want to, email us at staff at meetkevin.com, and we'll get you taken care of, and we'll bundle you up before 11.59 p.m. tomorrow.
[24:25] So that's my take on the big potential move for Metastar and why we think this could work out. Man, you're a poor Kevin. You're a poor, poor, poor man. Oh, that's okay.
[24:38] I am with you. With you. I'm sorry you don't have advertising. These days, each other here, I feel like nobody else knows about this. We'll try a little advertising and see how it goes. Congratulations, man. You have done so much. People love you. People look up to you.
[24:50] Kevin, pass up there. Bye. Nice to land with you. And you two, go meet Kevin. Always great to get your take.