Meta: Strong Ads Growth Doesn't Change Our Thesis

Summary

• Meta Platforms, Inc. delivered a stellar quarter with strong ad performance, especially in Asia-Pacific and Rest of World, driving double-digit after-hours share price growth.
• Despite impressive user and revenue growth, Meta's massive spending—particularly in Reality Labs—continues to weigh heavily on margins and cash flow.
• Much of Meta's revenue growth is driven by raising ad prices, a strategy that may not be sustainable long-term and could hinder future earnings growth.
• Given high valuation, unsustainable ad pricing, and weak underlying financials, I continue to recommend against investing in META stock at current levels.