Giverny Capital on Meta Platforms (FB): “A Death Star Doppelganger”

“Our number 10 position is the Death Star doppelganger formerly known as Facebook. We can’t say the name Meta Platforms without chuckling and wondering if founder Mark Zuckerberg maybe skipped high school the week they read Romeo & Juliet. “Facebook by any other name would smell just as” … never mind. This company is hated by many, and the name change might feel more like running away from the past than running to the future. But Meta remains the digital town square for some 2.8 billion people worldwide, who for better and worse use it and its sibling Instagram to congregate peaceably and exchange information on their favorite dance moves, vacation destinations and bonkers conspiracy theories. Because so many people spend so much time on Facebook, it is the digital world’s best advertising medium. Importantly, ad monetization outside the US is much lower than domestically, suggesting that despite its size Meta has a long growth runway.

Perhaps I am too flippant here, as Meta causes real harm to society with algorithms that push many toward extreme views and misinformation. But if Meta did not exist, I do not believe the torrential flow of misinformation would slow. People can congregate on the Internet without filters, full stop. The regulation of speech on social media platforms is an issue for responsible, thoughtful government policy. I am unaware of much progress being made.

Meta doubled its revenue and operating profit over the past three years, yet it trades for about the market multiple. There is some anxiety about the impact on Meta of Apple’s decision to make it harder to track people who use its mobile operating system. I suspect these changes will result in Meta and Alphabet getting stronger over time, as they will have the machine learning capabilities to track consumers in alternate ways and deliver targeted advertising, while competitors won’t.”