Meta Q2 - Good beat

After a rough few weeks for the magnificent 7 stocks, Meta galloped to the rescue with some great-looking numbers on Wednesday night. Revenues came in at $39 billion, crushing expectations by $760 million. Earnings were up 73% from this time last year at $5.16 per share, well ahead of the expected $4.72. If you annualise those earnings, the stock trades on a price-to-earnings ratio of 22 which seems good value for such a solid business.

DAP (daily active people) amongst their family of apps for the quarter was 3.27 billion, 7% higher than last year. This resulted in ad impressions increasing 10% year-over-year, led by Europe where advertising revenue grew by an impressive 26%.

WhatsApp is finally starting to contribute. Paid messaging tools are estimated to have contributed around $400 million. That's still small, but growing 73% versus last year.

Of course AI is still a strong theme. I am excited about how that technology can improve their advertising effectiveness as well as timeline algorithms. That would be the immediate benefit but Zuck and the team have bigger plans.

Their open-source Llama product will allow anyone to build AI tools on the platform. Meta has invested huge amounts of money (mostly on Nvidia chips) to build this system. They believe that having open-source AI will reduce the potential risks that come with AI.

How they will fully monetise free AI tools remains to be seen. I guess everyone is racing to become the next Apple app store of AI and it seems Meta is one of the front runners. I have a schoolmate who works at Meta and has been working on the Llama project. I am visiting him at the Meta head office in September. I am looking forward to getting some direct feedback.

This business has incredible foundations which allows it to stay ahead of the game. It is run by one of the best CEOs on the planet who took some time to mature but that is understandable. Meta is a must-own in all portfolios.