Meta Q4 - ads up, profits up

Last week Meta released results that were positively received. Daily active users on their various social media platforms rose 5% to 3.35 billion. That's a lot of people!

The average price per ad was up 14%, so group revenue rose an impressive 21% to $48 billion for three months. All that growth only came with cost increases of 5%, which meant Meta's profits jumped 49%, with net profits of $20.8 billion. The company is a cash-making machine.

The most important announcement was that Meta plans to spend $60 - $65 billion on investing in its future. When companies get this big and profitable, it is always tempting for management to dial down risk, and rather use all the cash generated on stock buybacks and dividends. Meta says the money will be spent to make their core business better and to further develop their AI ambitions.

As it stands, Meta has $78 billion sitting in cash on the balance sheet and they are expected to generate a further $52 billion in free cash flow. It means that $65 billion is a big bet on building Meta's future, but CEO Mark Zuckerberg is being quite sensible.

The company is well positioned in its core advertising market and is one of the key players in the very important and fast growing AI industry. We are happy holders of the stock.