00:00 Speaker A
Scott, it’s always a pleasure to meet you and have you on the show. Meta reported earlier. Please let me know what you think of this print, Scott. We went low and then jumped even higher. What do you think about it?
00:11 Scott
Well, I think the bar was set pretty low because expense expectations were higher throughout the quarter. Well, you know, Meta spends a lot of money on capital expenditures and operating expenses in 26 years, but there’s no real growth story in the consumer space. Nothing comes close to what the meta is doing right now. So the business beat expectations in terms of revenue growth by 300 basis points, with revenue growth expected to reach the midpoint of 30% in the first quarter of 2026. So I think this story from a growth perspective is pretty much what it is, and that flips the narrative that the spending was very much justified.
00:46 Speaker A
Scott, when a client asks you, “Where is the ROI on this spend?” what do you say to them?
00:54 Scott
ROI initially manifests itself as revenue growth. Looking at the growth in operating income, operating income will increase in 2026. However, Meta plans to report earnings on a quarterly basis over the next 10 to 15 years and thereafter. This means that the company is one of the few companies that is seeing real-time results from AI monetization. In the short term, revenue growth has improved and this should continue, but in the very long term, I think the spending will be again over a 10-year period. And I think as we get to 27 and 28, the business model will come into play again. And keep in mind that Meta is currently trading at 18x forward P/E on a gap basis. This is a very cheap stock given its growth.
1:29 Speaker A
So Adam, bring you here as a meta investor, shareholder, believer.
1:35 Adam
meta shareholders
1:37 Speaker A
Um, do you agree with what we’re hearing from Scott here?
1:39 Adam
Oh, I completely agree with what Scott is saying. And here lies the opportunity for investors. For thoughtful long-term investors like Scott and I who take a long-term view of companies, there is naturally arbitrage. The company takes a long-term view of itself. That’s why we’re making all these investments. So we come every 12 weeks and we try to make these and we try to stake our profits. We are not, but the market is looking for profit. Have they outperformed this metric? Have they fallen short of that metric and the stock is hovering around 3%, 4%, 5% from time to time? As you can see, the stock is currently up 4%. It fell 4% after the numbers showed that spending on AI was higher than estimated. Well, Scott is absolutely correct. This is a long-term story, and Meta is not managing its business by quarterly revenue.
