Meta: Early Warning Signs Of Excessive Capex Spends Like In 2022 (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Meta's revenue growth is decelerating and there are ad spend headwinds in the EU and APAC that can impact performance in upcoming quarters.
• I am surprised to see Meta still spending aggressively on data center capex not just this year but likely next year too. I am concerned about FCF margin erosion.
• The numbers show that capex investments thus far have not yet translated to better monetization. And it may not happen soon either as new AI model launches are getting delayed.
• META stock has become even more expensive and there is minimal margin of safety for buys. META vs SPX500 charts also show diminishing bullish strength.
• I have some concerns about whether we are seeing the start of uber-aggressive capex spends without sufficient ROI; a repeat of its Metaverse blunder in 2022.

Read the full article here.