Buy Hold Rant
Meta's stock is underperforming, but why?
11/4/2025, 8:07:18 PM
Economic Summary
- Meta (META) has drawn investor concern for large AI talent spending, highlighted by reports of $100 million signing bonuses, raising fears of repeat overspending like on AR/VR with implications for margin and capital allocation.
- Despite spending concerns, Meta is delivering substantial earnings (about $7.25 per quarter, ~$28 annually), which implies a relatively low price-to-earnings ratio and could make the stock attractive if profits persist.
- The stock trading near $700 and experiencing a roughly 6% decline compresses the PE further; as a >$1 trillion mega-cap, this combination of scale and earnings positions META as a candidate for outsized returns if investor sentiment stabilizes.
Bullish
- Strong profitability ($7.25 quarterly, $28 annual EPS) makes valuation look inexpensive on a PE basis.
- As a >$1T mega-cap, META has structural scale that could enable larger returns versus peers.
Bearish
- Aggressive AI hiring and $100 million signing bonus announcements risk overspending similar to prior AR/VR missteps.
- Share price volatility around the ~$700 level and recent 6% drop signal near-term investor unease.
Bullish tickers
META
Bearish tickers
META
META
1 price targets
700
Bullish
Robust profitability (≈$7.25/qtr, $28 annual EPS) produces an inexpensive PE, and mega-cap scale gives potential for significant returns.
Bearish
Investor concerns that large AI hiring costs and $100 million signing bonuses could mirror costly AR/VR overspending and hurt returns.