Mark Zuckerberg's VR bet has made META stock insanely cheap!

Mark Zuckerberg recently unveiled multiple cutting edge, virtual reality prototypes. Wall St. doesn't share Zuck's excitement over the "Metaverse" and META stock is trading around 52-week lows. Excluding their reality labs or "VR" bets and Meta's core advertising driven apps trade under 10x FCF. Is this insanely cheap or a trap for investors? Why does META trade at such a discounted valuation?

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[contextual_investor]

I’ve been building a position at these levels. We’re borderline hitting a 5 year break even despite all the growth the company has had, and the current 11 p/e. That being said, I’m also bullish on the metaverse concept. Initially I felt the same way as some of your points, that it’s not really something people wanted and it’s not solving any problems. But then I did some research on what I consider to be “waste of time” items such as phone app games and online flash games etc. these simple (and pretty dumb imo) games solve no problems, nobody really asks for them and yet they keep popping up, and so I kept questioning why people keep making them. Turns out there is a market that is willing to spend BIG money on such worthless apps. Some of these flash games bring in upwards of 200m a month in in-app purchases. That’s millions of dollars spent every month on a free app, that people willingly dumped money into despite knowing they may be bored of the app in a few months and there’s no real return to wasting that money on a free app. There’s a market for people who will spend countless amounts of money on games and experiences that I personally would think is an utter waste. And that’s where I think metaverse is heading. Once it gets mainstream enough you’ll see millions of dollars of in-app purchases (not to mention advertising) pouring through that concept.

[kraz]

Well no one had a problem with NOT thinking about classmates in 2006. 15 years later it's 40B/y business. So I don't know about ruling out AR/VR.

[joemoody]

I’m extremely bullish on meta. Put 40k down yesterday. Insanely cheap for how profitable this company is with or without metaverse. With that being said, it’s too early to know forsure but I believe metaverse/vr communications is the future

[Ditronus.]

The current metaquest 2 headset, and the occulus rift, have felt rough. It's extremely uncomfortable for small amounts of time, and the software just is not there and has not been there for years despite the platform being operational. It is very novel and amazing when you first try it, but the platform is expensive and there's virtually no support for it.

[bossman]

As I’ve been saying for months. Best deal on the stock market. I’ll keep buying

[ThePillsburyJewboy]

I bought a little. I think it’s worth the risk. They have tons of cash flow and the company has some of the smartest people in the world working there. I doubt it’s that easy to make some groundbreaking change in just a year of trying. Things take time

[freddiejonesy]

That guy on the couch at the beginning of the video, LoL. Great video!

[hsgtb]

Hey Daniel, what do you think about embecta? Did you look into the company already? If not, it is a spinoff of BD and manufactures diabetes supplies. It has high cash flows and is quite stable over the last view years (even though there isn't much data because of the recent spinoff). I think it is really interesting, and I would love to hear your opinion on the company.

[dreadkos]

As a business owner wherever my business is down i increase my advertising spending. I believe the same thing will happen with all the other business owners facing reduced sales and anxiety. Advertising in Facebook will go up as a cheap and competitive advertisement

[filb]

I found it interesting that Mohnish Pabrai sees the stock price doubling in a couple of years even though he is not invested in it. At this price, I expect however Li Lu to buy more meta shares. He has been bullish on this stock.

[RationalEgoism]

Good bull case. The reason it's fallen is because investors have soured on stocks which rely on advertising when there's a recession coming. People are having trouble buying essentials right now and don't have as much money for discretionary purchases.

[spencer]

Would love to hear a follow up after recent news and a bad trading day for [META]

[hee]

Cheap based on past profitability but metaverse is a vanity project which will require huge capex and in all likelihood be a massive flop. Heading into a recession too, it's the worst possible time.

[danielmanahan]

Daniel if you aren't buying more now at this price, then it puts to question why you didn't sell when the stock was a couple hundred dollars higher. what is your average cost basis on this stock?

[danrandle]

Hey can you do an analysis on $VRM? Just was signaled for a gamma squeeze and short squeeze and it’s cash value is $5 currently trading at 1.60 and looking strong.

[neels]

Does hiring freeze help in micro concern of META spending too much on metaverse?

[EzraWildes]

Thanks for the awesome videos!
Any chance you can do a video on Axon Enterprise- do you think the growth potential is baked in? Also, would love to know your thoughts on Samsara and the LiDAR stocks like ouster and innoviz?

[notme]

the thing with meta is, noone seems to be sure what it is. They sunk billions into development already and we are still unsure what value it will bring. This coupled with falling active userbase, and future growth is far from secured.

[luisalbertobauerlandivar]

If you look at Google's revenue and earnings from 2006 to today, you can see that they only grew and grew despite the 2008-09 recession, they never decreased (except for 2016 when they had to pay ridiculous amounts of taxes because of a tax regulation). I wonder if this is gonna be the case for Meta as well.