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TIP649: Owning Stocks for the Long Run w/ Pierre-Olivier Langevin
We Study Billionaires - The Investor’s Podcast Network
Analyzing Meta's Stock Recovery and Competitive Edge
Meta has shown remarkable stock recovery, rising from under $100 in November 2022 to nearly $500 in early 2023, representing over a 5x increase within two years. This rebound follows a challenging period marked by three consecutive quarters of revenue decline in 2022, a difficult scenario for investors accustomed to previous growth rates exceeding 30%. However, despite these challenges, when adjusted for external impacts, Meta’s revenues demonstrated slight growth, indicating resilience amidst a tough digital advertising landscape influenced by COVID-19, competitive pressures from TikTok, and changes in Apple's privacy policies. The company strategically corrected its trajectory by reducing excessive hiring linked to Metaverse investments, laying off 20% of its workforce in December 2022, which is expected to enhance operational leverage and financial performance moving forward. Meta’s competitive advantage is further solidified by owning four of the six most popular social media platforms, granting it unique leverage to drive engagement across its ecosystem. Initiatives like Threads, a social media platform similar to X Twitter, can enhance Meta's competitive position by integrating with its existing user base. Given the overwhelming dominance and integration of its platforms, Meta's ability to fend off competition appears robust and its prospects favorable for sustained growth and profitability in the coming years.
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