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Meta Platforms: Ignore The New Name And Focus On What Matters

Jan. 03, 2022 5:47 AM ETMeta Platforms, Inc. (META)41 Comments
John Rhodes profile picture
John Rhodes


  • Facebook's name change to Meta Platforms is not deeply meaningful.
  • It has been and will continue to be an advertising business.
  • It continues to grow rapidly at high margins while stacking up a tremendous pile of cash for investors.
  • Conservative estimates indicate the company will return at least 10% over the next several years, although 20-30% is entirely possible.
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Meta logo is shown on a device screen

Fritz Jorgensen/iStock Editorial via Getty Images


I am not a fan of the name "Meta Platforms" for Facebook (FB). The company is playing with semantics. In this article, I spend time talking about this smokescreen, and why ultimately, it's a distraction for investors.

Instead, investors ought

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This article was written by

John Rhodes profile picture
I am an investor, entrepreneur, father, husband, coach and teacher.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of FB, GOOGL, AAPL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (41)

Let’s hope people didn’t take your “buy” advice
BM Cashflow Detective profile picture
I've increased my position on $FB in the past few days and weeks.

According to analysts' expectations, free cash flow growth is a strength of Meta Platforms, as the development forecast over the next years shows.

In addition, the company generates a sharply increasing mountain of unbelievable amounts of cash and thus punishes all of its doubters.

An own assessment check with regard to quality, valuation and growth expectations comes to the following result and shows the future potential.

Valuation check with the P/FCF/G ratio.

(P/FCF ratio FWD 19.88) / (Estimated FCF mid term growth consensus +20.69%) = (P/FCF/G ratio of 0.96).

(0.96 x 100 / 1.00 = 96.00% Discounted Value).

(100% - 96.00% = 4.00% Discount, undervalued, margin of safety).

Quality check with the “Super Magic Formula for Growth Stocks”.

TTM CROIC 26.0% = 96.00% Discounted Value.

Combined CROIC / P/FCF/G ratio = 27.1% actual CROIC = 100% fully valued.

Thus an additional and natural CROIC leverage potential of 1.1% which is not priced in the previous CROIC.

Benchmark: Sector Communication Services CROIC 5.5%.

Estimated mid term return potential of 21.51% CAGR.

(Growth +20.69%, mid term mean reversion potential +0.82%).

After then, Company is a "Super-UltraMega Magic Formula Growth Stock" and a strong buy.

A free cash flow machine par excellence. These compelling fundamentals should rule out any confirmation bias.
Moats and Income profile picture
Only 3% of FB users have an VR headset….and a third of them are FB employees which need the goggles to attend Marks meetings…

Presence using a niche VR product has massive adoption hurdles..98% of users don’t use VR…much easier to look at a smartphone and be present in reality…
Just the Millionaire next door profile picture
@Moats and Income Ya that was a terrible idea with the Android-powered Oculus Quest, the Vive Cosmos, and more all coming soon why would they want to do that.
@Just the Millionaire next door I put one of those things on at Best Buy once, it was amazing, like I was in the middle of a battle of some sort...the sex industry alone could finance it.
@Tatech lmfao business will boom for Meta once the hub adopts this
I have been investing in Meta (FB) since its IPO. Like to think that Ads are a consequence.

Meta was and is still is a worldwide social media network. What is sticking for users is not the Ad, but to socialize with family, friends and enterprises (any size). There’s still 2 big differences between Meta and Google. Meta is visual and a social network! Google is not. So it’s still the #1 in what it does.

I mention all these things because it’s the service (THE PRODUCT) what makes Meta so UNIQUE. Not the Ad.
Adding Metaverse, is incremental to its UNIQUE services. And again, any incremental AD on Metaverse will be a consequence of having another UNIQUE or INNOVATIVE service. For instance, Whatsapp is not monetized but it’s a MONSTER WORLDWIDE SERVICE integrated to e-commerce (FB and IG) which helps Meta to sell more Ads of course, but as a consequence of the UNIQUE service (Whatsapp).

From the business standpoint Meta is and will be: Ads, E-commerce Payments, Oculus, etc. Ads is the main line of business of course. The others will be bigger in the future.

On Meta what is important in the long run is the quality of its UNIQUE services. It will lead and prevail because of this. This is what makes of Meta the number one on digital advertisement not the other way around.
Typo: there are still 2 big…
@Alfred44 Why would anyone want to own a stock that doesn't pay any juicy dividends? We laugh at people/investors claiming how they got rich on Facebook. The stock has and will never pay a dividend, so all you are looking at is unrealized gains. Share price appreciation doesn't produce any wealth. You are not richer as long you don't sell, it's all an illusion. You are basically counting your eggs before they hatch. Hope that helps, all the best,

"Share price appreciation doesn't produce any wealth."

Would you trade portfolios with someone who is down 1000%? Its just unrealized gains right?
Hi John, thanks for the post. What are your thoughts on the effect of the huge increase in development expenses they have communicated for the coming years?
Why do I feel like that bartender in a recovery program…..?
Hope you all bought the whistle blower dip!
Just the Millionaire next door profile picture
Agree with your thesis but per SA EPS is projected to be $14.41 in 2022 compared to $13.96 in 2021 but the revenue growth is there. Obviously you have to spend $$$ to make $$$ and that is what they doing right now.
Metaverse is a scam. Facetime and Zoom is more than enough for most people. The VR headset is a failure and Zuck knows it.
@T87 >>The VR headset is a failure...<<

WHAT...I can't squeeze the Charmin!
ArtfulDodger profile picture
Very good piece, JR. Yep, it's difficult to find two companies with the internals that FB and GOOG have. In my view, they must be staple holdings.

I'm giving you a follow tap for the piece.

I am, the ArtfulDodger
@ArtfulDodger only MSFT comes to mind.
@ArtfulDodger And why exactly should they be staple holdings? Two of them don't evan pay a penny in dividends, another has a paltry yield of 0.74 % (!) that won't pay the bills and certianly doens't keep up with inflation.

We are, TOGI.
ArtfulDodger profile picture
As I wrote: "It's difficult to find two companies with the internals that FB and GOOG have." This is not to mention the businesses they have with deep, wide moats filled with crocs.

I don't buy every stock to collect dividends.

I remain, the ArtfulDodger
JosephCortes profile picture
Meta 4ever

A keeper.

Meta long.
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