Now down 4:50 and basically stable at that level,
at least for the time being.
Meantime, Meta beat on the top and bottom lines this
morning.
That's good. But with shares down more than 10%,
something has investors worried and we kind of know what
it is.
Our next guest held his by rating on the stock
but says today's report was a bad recipe for Meta.
Joining us now, Rob Sanderson,
managing Director at Loop Capital.
Rob, always good to see you.
Thank you for being with us today.
What was the NIT to pick in meta?
This report today
it's the commentary on spending outlook.
They've a rare move for for meta to to raise
their operating expense guidance.
They they brought the low end up and they're spending
plan to spend another 3 to 5 billion in CapEx
incremental to what they had guided the street earlier.
So there's a a big spending cycle.
You know this is not a new message per SE.
You know the, the, the the they've been talking about
elevated spending levels for some time.
The difference is that you know the company was putting
up material upside and raising guidance the past several quarters
and and the bad recipe is
higher expenses on only an inline result and and that's
the correction that we're seeing in the stock today.
Should this is kind of a theoretical question.
Should or shouldn't the market look at this
as a vote of confidence in what Meta is pursuing
and doing and something that in the long term is
going to pay big dividends for the company,
even if in the short term it means that it
calls into question
profitability forecasts for for the next
four or five quarters. Yeah,
well, that would certainly be the bullish lens for long
term investors to look through.
Don't forget the companies, you know,
spending about 1/4 of their profits on Reality Labs and
and this vision to build up the Metaverse.
So that's not a a message that has been
too favorable with investors. And here we have another,
you know, potentially large you know spending category that really
is theoretical,
has a lot of excitement and a lot of promise.
But there's not a lot of you know
ROI or ways to justify you know at this point
what this might look like over time when you look
at let's let's set aside these very
pointed and and seemingly reasonable concerns about meta and you
look at the current operating business,
How do you evaluate that and their advertising and the
fact that they seem to be not a stealth winner
but but certainly a big player in the world of
AI.
Yeah, the core business is very impressive,
Tyler. I mean to grow
27% at at the the the the levels of advertising
revenue that they're doing is,
is is really unprecedented. You know,
Google was growing at about,
you know, half of this rate or or so when
they were at comparable levels of scale.
So it's very impressive. They've done a fantastic job of
utilizing technology and AI is a is a big part
of the story as to
how they're getting better content ranking and relevance and ad
matching and tools for advertisers.
And a lot of the stuff is really working and
it's creating value and and that's why we're seeing a
a pretty sharp acceleration in in in the top line
growth over the past several quarters.
It's a very positive story there.
You know the the the the longer term on the
AI whether they're a winner or not they certainly look
better positioned than others.
You know Google being the the the core example where
it's the the jury sort of out as to what
the consequence of of AI and and
interacting with all these agents might have on the search
business.
But but for meta this looks like powerful technology that
can enhance their value proposition without a lot of downside
risk.
Yeah let's just note for the record you have a
buy rating and a price target of
555 on the stock. Let's spend the rest of our
time talking about Alphabet
on which you have a hold rating.
What are you looking for
in its report?
Yeah, I think we're going to see stability in the
search market is sort of the the you know,
biggest, biggest point that investors are looking for.
The reads on search advertising look healthy this quarter.
We're expecting a little bit of a deceleration in YouTube
and that's just coming off of a very strong NFL
cycle in the fourth quarter.
We've got a lot fewer games in the first,
in the first quarter. So that's natural there.
And you know the questions are going to be again
on spending outlook and
and their AI strategy if they had some really some
some product blunders obviously well publicized on the Gemini launch.
You know investors are certainly going to be interested in,
in in management's view in correcting the course here and
and bringing you know better technology to market.
All right. Rob, thank you very much for your time
today.
We appreciate your analysis of Meta and
Google as well, or Alphabet as well.