Meta Platform’s future stock performance hinges on today’s Meta Connect conference. The company is currently at a crucial point, and according to Barron’s, its CEO Mark Zuckerberg, will open today’s event by discussing the company’s advancements in artificial intelligence and unveiling new products.
The Verge speculates that Meta Platform (NASDAQ:META) might launch updated versions of the Quest 3 virtual reality headset and Ray-Ban Meta smart glasses. If the announcements are well-received, the META stock price could rise toward the upper end of its trading range.
However, if investors are disappointed, the stock may struggle to maintain its support level around $540.
Meta Platform’s AI Vision: Strong Earnings and 450% Stock Surge Signal Long-Term Investment Potential, Says Gene Munster
Gene Munster from Deepwater Asset Management recently shared his thoughts on CNBC about Meta Platform (NASDAQ:META). He is optimistic about the company’s use of AI to enhance user engagement, but he found the initial announcements at Meta’s Connect event to be “a little thin.”
Munster emphasized that Meta Platform (NASDAQ:META) envisions a future with smart glasses—referred to as AI glasses—that could sell in the hundreds of millions. Currently, their Quest device has only about five million units sold, which is just one percent of potential sales.
Meta is making it clear they believe in a future where smart glasses, they refer to them as AI glasses, are going to be hundreds of millions of units. Today if you look at Quest it’s probably five million units, one percent of sales,”
Gene Munster
When asked if the stock’s impressive gain of over 60% this year is warranted, Munster affirmed that it is. He noted that Meta Platform (NASDAQ:META) has shown strong earnings growth, and we have yet to fully see the benefits of AI.
Despite some market hesitance regarding Meta’s heavy investment in AI, the company aims to enhance user engagement and improve language models like Llama 3 to better interact with its 3.2 billion daily active users.
Concerns remain about whether Meta Platform (NASDAQ:META) can sustain its high spending. However, the company has a free cash flow margin of around 30% and is projected to generate $50 billion in free cash flow this year.
This puts its stock at roughly 26 times this year’s cash flow and potentially at 21 times next year’s projected $58 billion in free cash flow. With $35 billion in net cash and a strong user base, Meta could be a solid long-term investment.
Meta Platform’s Rise Fuels Rowan Street’s Portfolio
In their Q2 2024 investor letter, Rowan Street Capital highlighted Meta Platform (NASDAQ:META) as their largest holding, reporting a remarkable 450% increase since their November 2022 note.
Their investment in Meta Platform (NASDAQ:META) began in 2018, with an average purchase price of about $172 per share. The stock now trades around $535, representing a 3x return over six years, or a 20% annualized return.
“We are pleased to report that Meta Platforms, Inc. (NASDAQ:META), our largest position in the fund, has delivered a remarkable performance, +450% since our November 2022 note.
Our investment in Meta dates back to 2018, with an average cost basis of approximately $172 per share. Today, the stock trades around $535, reflecting a 3x return over the six-year holding period, equating to a 20% annualized return.”
Rowan Street Capital
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