The big story is Meta stock gained 20% on blowout earnings:
FBL, a leveraged single-stock ETF that tracks the 2x daily returns of Meta, gained 40%:
AFIK, this is the greatest single-day gain for an ETF ever. This is not a penny stock or some speculative biotech going up 40%, but a fund which tracks a $1+ trillion company. Thanks to FBL, my returns for 2024 are well on track for exceeding 2023, and overall gains for the leveraged portfolio are 13x compared to 10x from October 2023, for a CAGR of 29.5%.
It also shows the superiorly of big tech compared to crypto, which I have been saying for years. So many people are hoping to get rich with crypto. Controlling for volatility, they would be better off with leveraged tech instead of Bitcoin or Ethereum. Reddit’s /r/wallstreetbets community is hopping with activity as people share screenshots of their large Meta gains; by comparison, crypto communities are despondent, the promise of ETF-approval riches at this point looking like a cruel joke. The common assumption or saying “the house always wins,” implies a rigged game or a zero-sum game. Not necessarily. There are ways to tip the odds in your favor, like avoiding crypto and buying tech instead.
Meta’s quarterly profits tripled:
For the three months ended Dec. 31, Meta’s revenue was $40.1 billion, up from $32.2 billion a year ago and exceeding Wall Street estimates of $39 billion, according to data compiled by FactSet. Profit was $14 billion, up from $4.65 billion a year earlier.
So we can extrapolate annual profits of at least $56 billion, which is about 4x that of Walmart, to put this in perspective. Meta staged probably the greatest corporate recovery ever, or at least comparable to when Steve Jobs returned to Apple in 1997, but compressed into a single year.
Meta is firing on all cylinders: Near-total dominance of social networking, chat, mobile ads, and now branching out into AI. Only YouTube and Google search are comparable in dominance.
The mobile mobile ads are so expensive, and multinationals and other large companies spending so much money on clicks and impressions, such as ads for healthcare and financial services targeting retirees. High inflation is pure top-line growth. TikTok and other competing platforms are unable to attract those expensive advertisers and the lucrative older demographic as Meta has.
Threads, the unloved spinoff of Instagram, like Pinterest, is implicitly marketed to high-SES women who seek a safe space alternative to the increasingly un-woke Twitter. What Threads lacks in total users it makes up for in high earnings per user.
Yes, the Metaverse losses were bad (and Meta continues to lose money on this), but Meta was never in dire jeopardy as assumed by the media and pundits. If I were in Zuck’s position I would have not have created the Metaverse at all and would have either repurchased stock or bought out a competitor, but hindsight is 20-20 and he has a history of making bold bets that pay off, like acquiring Instagram in 2012.
Love him or hate him, Zuck keeps defying the doubters. Even as far back as the IPO he was dismissed for his youth. Meta/Facebook was dismissed as a fad or the next MySpace. He knew Meta needed to be streamlined, and he achieved this. Same for his foray into MMA, which initially seemed like a publicity stunt, but he was serious about training. There are some people who are so driven or intense that they can do anything they set their sights on. When you invest in a company you are investing in not just discounted future cashflows but the talent brought forth.