Meta Stock Analysis — Full Breakdown & Transcript

[00:00] All right, we need to talk about MetaStock and price targets for MetaStock, especially in the age of MetaMuse. So, obviously, there's been a lot of hubbub about Meta and MetaMuse, starting on Monday, number one in the app store, two and a half million users.

[00:15] It's one of the influencers got bought out to talk about it, blah, blah, blah. I haven't been sponsored by Meta yet, but I would gladly take a sponsorship from Meta. Put out a little balloon out there. I actually think the product's great, but let's be real.

[00:29] Meta's Wall Street estimates have not moved, and its implied volatility is dirt cheap. Let me explain what both of those things mean in English.

[00:42] Wall Street tends to look at forecast growth rates for a company to determine whether or not a company has a fair value today. Most of Wall Street uses what's called a discounted cash flow method,

[00:55] or we look at the discounted cash flow over, let's say, the next 10 years based on growth compared to some form of discount rate, then we come up with some kind of value today. What are we willing to pay today? That tends to be an assumption loaded, and so an easier way to do this, in my opinion,

[01:10] is you just take the Wall Street growth assumption, and you compare what you think the company's going to grow at compared to what they think. And then you look for the change over time from Wall Street.

[01:22] Okay? So, how that might look, let's draw that out on this little JP Morgan note, which we're going to go through on Meta. How that might look is, if Wall Street thinks average growth for Meta is going to be 15%,

[01:37] what you want to track is, after a catalyst event, does that re-rate up? When Wall Street re-rates a stock up, and if they re-rate it too high, that's bearish, continuing.

[01:53] But that re-rating up is really bullish. That's where the stock can run, because now you get fund managers that are like, oh my gosh, this looks really cheap, I gotta allocate. But you generally want to get in before that re-rating.

[02:07] So I wanted to see if since the Metamuse launch, this stock has re-rated yet. And the answer is, it has not yet. These are the estimates. $34.85 of earnings per share puts this at about a 21 times earnings play.

[02:22] If you look at the forecast growth rate, Wall Street literally thinks this company is going to go at 9% on earnings next year, followed by 23%, 17%, 12%. That works out to an average of about 15.7% per year.

[02:36] In my opinion, following Metamuse launch, plus what's going on with advertising, especially because of the AI battlefield for advertising, I think 15% for Meta is way too low.

[02:49] This is why I got into Meta, and I've been shilling it on this channel, even saying that the stock was about to violently explode since around $566. So look, I've been meet Kevin Meta stock, August 28th.

[03:02] Meta stock is about to violently explode. Full detailed video on their financials and why I thought they were dirt cheap. they've exploded. Now, what's fascinating is since that explosion,

[03:15] we still don't have a re-rating. Which means that re-rating, in my opinion, is still ahead of us. Which actually, in my opinion, means the stock is, in a weird way, still cheap. Now, could you get volatility, like, buy the rumor, sell the news,

[03:29] after the meta event today and tomorrow, and the keynote from Mark Zuckerberg, and announcements for products at this time, or whatever? Of course! Who cares, though? Short-term volatility. This is a great long-term buy, in my opinion. Obviously, not personalized financial advice for you.

[03:42] And I'm exposed to the stocks. I'll wait for the buys and the risks on the table. And there are risks. We'll talk about them. But that was the first thing I talked about, was the voluntary re-rating. The next thing that we need to understand is volatility.

[03:55] So volatility right now on a 5- and 10-day basis is really low for Meta. That's a very, well, it's not really low. It's just below trend. And after the surge that they've seen in MetaMuse, I would have expected options volatility to have gone up way higher.

[04:10] That actually means that options are cheap to buy right now. If you're bearish, you can buy puts. If you're bullish, you buy calls, right? But options are actually surprisingly cheap right now relative to its historic volatility.

[04:23] It's below trend on a 5- to 10-day historic volatility, which I think is remarkable for the catalysts that they're running into here. But now, let's take a look at this JP Morgan piece.

[04:35] So J.P. Morgan puts this together about Meta, and they have an $820 price target for Meta. My price target is honestly a lot higher. If I put Meta at Meta's net margin, bringing 35% on average of every dollar to the bottom line,

[04:51] 35% net margins puts this at around somewhere 2.69 peg stock, and they have been doing buybacks until recently. They are burning cash, in fairness, from a cash flow point of view. so you don't have as much of that cash flow yield going for you anymore, which

[05:05] could be a benefit to the peg ratio. But if I take a 2.69 peg ratio times 34.85 times what I think will end up being somewhere around 20% growth, this soft

[05:17] coming is worth At that point it is fully priced and if it goes beyond that because all of a sudden it gets momentum like an Intuit stock or a Dell fine

[05:32] That's what I would sell, is if it gets euphoric past those levels. But until it bypasses my $2,000, I'm not even thinking about selling this puppy. So that's why I wrote $820 from J.P. Morgan sounds bearish.

[05:47] They talk about the virality and buzz of Metamuse. They also talk about how Meta is shipping quickly with a series of innovations within just two weeks of launch. Metamuse launched a beta for outbound calls for businesses.

[06:00] This is huge, by the way, because businesses who make money spend money because they want to grow. Businesses that make money spend money. And so if you could sell things to businesses that are making money and help them make more money, you make more money.

[06:13] B2B makes money. I may also charge more. But anyway, opened access for developers to build news connectors and came out with news for Mac. They also added shop pay for agentic checkout.

[06:25] Now, I heard that, and a lot of us did, heard that Amazon blocked them. I think that's stupid. Amazon blocked news agents from shopping on Amazon

[06:37] because it's an advertising potential loss for them. But I think that's dumb. And they should actually be leaning into agentic AI using Amazon. You know, we expect later this year to launch what we're calling the Reinvest Terminal,

[06:50] which, you know, we want to compete with something like the Bloomberg Terminal that costs $2,500 a month. And we think we can provide more value, certainly more value per dollar, but at a substantially lower cost.

[07:03] So my startup is really excited about what we're developing and what we're launching. But the point is, the reason I've written that up is because I would encourage agents to integrate with what we're building.

[07:15] In fact, I think the future is going to be, you're going to end up having so many little agents doing stuff for you. You know, one agent's going to, you know, track your calories. One agent's going to track your fitness. One agent's going to track your doctor appointments and scheduling.

[07:29] One, you've got to get your colonoscopy again. You know, all this bull crap. I have my colonoscopy, by the way. And I'm 34. I say that as a total tangent because people are getting colon cancer a lot younger,

[07:43] and so let this be a little PSA, pun intended for the people who know what I mean, on bigger colon cancer days. It's like, you don't feel anything, it doesn't hurt, it's not a big deal.

[07:56] You know, the concept of it is worse than the actual process. But a little PSA. People are getting cancer a lot younger now, and colon cancers will be a killer, especially for dudes.

[08:08] So it's happening younger and younger. So do look into that. I'm good. It's worth noting. I asked them. I'm like, hey, I told them before. I told them before I went under. They're like putting the, you know, they're putting the injection in. The injection's going, Doc, when you're in there, I need you to tell me,

[08:23] am I in the, because it's going to be one of these. It's guaranteed to be one of these, Doc. Am I going to be in the bottom 10% or the top 10% for my age, right? first thing I say

[08:36] I open up my eyes Doc was I in the top or bottom and he's like huh what top or bottom 10% he's like Kevin it was probably a stroke he's like Kevin you were in the top 5%

[08:50] oh anyway how am I not talking about meta when I get on this distraction well it's because people are going to have so many different agents how are you going to keep track of all this crap literally like how do you track the crap

[09:03] and you keep track of it with an orchestrator agent that coordinates all of your subscriptions. So let's say you have an agent that's supposed to deliver news and you have subscriptions to the Washington Post, the New York Times, the Wall Street Journal, all of them.

[09:15] It's hard to go to all those sources to get all the information you want, so you need something that consolidates it somewhere. So these companies should actually be encouraging agents to let people use their subscriptions.

[09:27] I'm a big fan of that. And I think a company like Meta, so MetaMuse, or maybe GlockBot, although Dropbox is compared in a moment, I think these other competitors can do exactly that, where if you enable connector apps,

[09:41] you make your application the go-to place, and everybody else can win as well. You just have to integrate with each other apps. I think it's great. So I think Amazon's making a big mistake on that.

[09:55] But anyway, Amazon blacked out access to Muse. We saw that. Muse had already launched. Watermelon might come after MetaConnect. fine. We talked about evaluation, fine. We talked about the subscriptions of the orchestrators. Let's look over here.

[10:08] Billions of people are likely to use agents for health, hobbies, finance, productive relationships, taking actions rather than simply answering questions. We expect Meta to prioritize adoption and engagement over monetization

[10:21] near term, with a clear line of sight to longer term monetization. Commission models, fees on bookings, reservations, lead generation. I hate J.P. Morgan, but this was actually all a very fair breakdown on Meta.

[10:36] I actually think they're bearish on Meta, but I thought this was a very good breakdown. They even talk about how Meta might be able to profit off of agent interactions which is great You know again business makes money Now the Meta smart glasses then came up and we had a conversation live about what Meta smart glasses could do for you

[10:56] on an agentic basis. So I already have multiple different Meta glasses. I use them for different purposes. I will show them here, even though I'm not sponsored by Meta. I do like to show things when I think they're valuable for you.

[11:11] they are bulky, obviously it helps if you're, you know, distance blind like I am, for some reason I'm really good at looking at the stock chart and things up close, uh, but, uh, but this is a little

[11:23] harder, so, you know, uh, I had to wear these as a jet pilot, obviously, my, uh, jet pilot, uh, FAA license has, uh, has a restriction on it for glasses, do I have that here, yeah, I actually do,

[11:36] here it is. Nope, that's my voter card. That's no fun. Oh, that's for guns. I don't know where I put it. Oh, it's in my flight bag. But anyway, see how you get distracted on anything. So it's obviously very useful

[11:48] if you have prescription lenses to wear these because you kind of have to wear lenses anyway. But you can get not only the everyday sort of glasses, but I use these guys for like skiing or even like water related activities

[12:02] is kind of cool. I like this because it has the camera in the middle. But It's especially great for capturing pictures of your family, like skiing or doing fun things, or your children. I got seven of those children, so there's a lot to talk about.

[12:14] But the smart glasses, they launched with this integrator for talking to Meta AI, and just asking, like, hey, what am I looking at? Or asking generic chat GPT-style questions.

[12:27] And honestly, it was trash. It was like the worst LLM ever that they could have created with the metaglasses. So I feel like that has really been an untapped market because their product was so bad when they started.

[12:43] And now there's this thought that, well, what could agents do that the chat box can't do when it comes to sunglasses? And there were actually a lot of cool ideas that we came up with. Now, this is just pure speculation, but here are some of the things that we wrote down.

[12:56] and some of these were kind of crude. Sorry. So, first, you see something in a store, your glasses automatically price compare for you and buy and ship to your home what you need.

[13:11] You get the cheapest thing online. If you're wearing your glasses and your glasses pick up that you're running low on milk or eggs or toilet paper, it can automatically order you more, restocking autonomously.

[13:23] Honestly, probably useful for inventory management as well. Walk you through mechanical stuff in real time if you're trying to repair something or you're doing construction or whatever. Like, imagine you're a contractor and it's like, hey, you forgot to attach the ground wire to the outlet box or whatever.

[13:38] The re-technical box. You used the metal box and you forgot the ground wire. Oh, my gosh. Fine, I'll use the plastic box. Anyway, location. I prefer metal, personally. Location visual-based reminders.

[13:50] Like, I thought this was a useful one. Like, hey, it looks like you're right next to CVS. Remember on your to-do list is picking up shaving cream from CVS because your wife needs it today. Whatever, right?

[14:02] And I thought that was useful. Agentic walkthroughs for travel or tours. This is already what it's supposed to be able to do, but it just sucks at. Augmented reality for real estate or construction. Virtual staging when you go look at a fixer-upper, for example.

[14:15] Great. Walking or driving heads-up displays. Big fan of that. I was driving on the Autobahn. I think I went my fastest speed ever on the Autobahn. The last time I was there, I was wearing Metaglasses, and it was great.

[14:29] I think I was in a BMW M-Series, and I don't know, I was probably like 147 miles an hour or something. I think that was the highest I was there. So on the Autobahn, when nobody else was around, it's not that big of a deal.

[14:41] But what was very interesting about it is, when you're going that fast, you don't want to look down. And so a heads-up display would be very nice. I could actually see a heads-up display being very nice for aviation. Metaglass is already used a lot for aviation,

[14:56] but some aircraft, really large aircraft or extremely expensive aircraft, actually have a heads-up display. You can kind of pull it down, and you can overlay the runway

[15:08] through a heads-up display through the clouds in front of you, which is really incredible. But, you know, for smaller aircraft or different aircraft, you don't have the luxury of a heads-up display. So the problem as a pilot is, you know, sometimes you're flying,

[15:24] and you're coming into land through the clouds, and you're like, man, I can't see anything. That's fine. Then you look down at your instruments. Okay, fine. But once you break out, you now have to transition between looking at the runway,

[15:36] am I too high, too low? You know, what factors do I have in front of me? What's going on with traffic? Well, at the same time as looking down below you, then your instruments stand on. How's my speed? Am I within thresholds?

[15:48] I'm adding my wind corrective factor. Like, that's hard. It's not just looking down at, oh, I'm at, you know, 120 knots coming into landing. It's, oh, I've got to add my corrective factor of 5 or 10 knots or whatever.

[16:01] Okay so now you glancing down while trying not to die 200 feet above the ground in a jet and you looking down going okay okay God 120 knots actually 130 and you you know like a head of display and a practical purpose for pilots would be just great

[16:17] So, big fan of the potential here. That's also why I like these sunglasses. And then I've got, like, an 86% market share on that. I think it's great, and I think it's coming. So, sort of that augmented reality-ish-ness. I did not get the last, like, augmented reality thing where the text messages could pop up,

[16:32] because I don't want more text messages popping up. It's very annoying. you know, try to work as if the last thing I want is more notifications popping up. But, like, an agent that can give me what I want when I need it is great. Then we got into some, like, really crude ones, like automatic calorie counting.

[16:49] And so, you know, you go sit down at McDonald's and go have your McDonald's, and then all of a sudden you get an ad for Ozempic that plays in your ear. Or, like, hey, I just saw you in the mirror. Would you like? Okay, I told you it was going to get crude.

[17:02] But it got even worse because then in the chat some people were recommending that the glasses could be useful for, like, helping walk people through better sexual experiences. Yeah, I'm just going to leave it at that.

[17:15] So people had a whole lot of creative ideas for versions of, that's sort of a whole new definition of heads-up display. But anyway, rep counter while working out, that was interesting. Okay, then we also have flight and hotel bockings.

[17:31] So J.P. Morgan here wants you to know that you could use agents to box flights and hotels. Audit subscriptions. We talked about this on the software sell-off issue yesterday,

[17:43] and subscription sell-off issue yesterday, the consumer inertia basket we talked about. Obviously, reminder of calendar basket, all that kind of stuff. That's more generic. What I did think was interesting here is they kind of bagged on Grok a little bit,

[17:56] specifically because Grok didn't have rated categories in routines, connected fitness, or permissions, where Meta was ranking high. And part of this might be because Meta is coming and launching with a generous,

[18:10] what they call, well, they call it generous, Jason Logan is, free tier, whereas Grokbot doesn't, and so that could potentially be a headwind. Mind you, though, Grokbot X has like 120 million,

[18:24] I'm sorry, the latest stat, I just tweeted it, and then the Bloomberg guy replied to me and was like, here's the article. I'm like, man, you are a great employee. You are so frickin' loyal to the boomers.

[18:38] But anyway, Bloomberg just reported SpaceX's Grokbot usage up 24% over the last week, which is great, but you've got 400 million active users per month on X, and you've got like 3.2 billion on Meta, right?

[18:52] Anyway, so I tweeted that, and I said, nice job, Elon. And then Ed Ludlow, or whatever, reports the Bloomberg article and quotes himself. And I'm like, man, you are really dedicated. So I like his tweet replies.

[19:05] I'm like, you're a dedicated employee. Good for you. Such a shill for Bloomberg. But you know what? I mean, if you're an employee somewhere, that's good. You know, that might end up helping you get a raise. You know, the people who are the biggest shills for the company deserve the biggest raises.

[19:19] Duh. It's the teamwork. but anyway so overall some of this is obviously speculative in what this

[19:31] could turn into and there will be competition for meta glasses there will be competition for augmented reality there will be competition for agentic AI and so I don't want to get too carried away with oh this is the

[19:43] game changer alone's meta I just like meta from an ad point of view and to me I think you know meta wins from, as they write here, AI-driven ad ranking and recommendation games,

[19:57] along with more engagement and now a credible path to monetizing AI-driven CapEx. So, somebody here writes, glasses can be your home inspector? Yeah, probably at some point in the future.

[20:11] Yeah. Yeah. Guys, add a PSA blood test to your yearly blood test. Help you track your prostate health. See, this is a PSA. You're giving away the pun.

[20:27] Anyway, so yeah, man. That gives us a little bit of color on meta. I think that I'm going to just be transparent about this. Usually, I mean, the stock's up 3% intraday right now, which is great.

[20:40] Okay, I'm happy. That's great. But I'm going to be transparent about this. I kind of hope they tank after the event. because if they tank after the event, I could go buy the gift before the monetization actually shows up in their earnings.

[20:53] So people trade out of this because momentum slows down after the event? Fine by me. I'm a buyer. I'm being a transparent shill about that. And if I lose money, then all I'll do is come back to you and play fair.

[21:08] Oh, man. Good luck. Kevin, good luck. Good luck. Oh, that's okay. I am with you. If you like that video, But send this one out. I think you're going to love it. I don't even want to advertise these things that you told us here.

[21:20] I feel like nobody else knows about this. We'll try a little advertising and see how it goes. Congratulations, man. You've done so much. People love you. People look up to you. Kevin Parker up there. Find that calamus. And you two both meet Kevin. Always great to get your take.