Sirwin
Sirwin

My Meta and Google Balance Sheet Expectations


Meta is a stock that upset me, I got into it last year when it fell below $100. I came out at $300. I thought it would go higher, but I didn't think it would go this far. As of now, Meta has surpassed $500 and looks like it has even more to go. Meta uses artificial intelligence very well. The biggest fear about Meta last year, or more precisely in 2022, was that Meta would reduce its effectiveness in showing ads after Apple stopped sharing data with Meta. Because you know that advertising income comes entirely from advertising. It was also thought that he spent too much money on the metaverse issue. He reduced the money he spent on the Metaverse. They released two very good products there. Both Quest 3 glasses are nice glasses and the glasses they released together with Rayban are good. I think they are the leaders in that market right now. In other words, Apple has not yet entered that market. So, the product is new, Meta is the leader there, but more importantly, they have made a great recovery on the advertising revenue side by effectively using artificial intelligence. They increased by 24%. When you compare it with Alphabet a little later, you will see more clearly how important this is. This made the markets very happy and excited.

What do I expect from Meta this quarter? Let's see what the market expects first. After that, let's see what I foresee. When I look at Earnings, it's next Wednesday. Tesla is coming next Tuesday anyway. Wednesday Meta is coming. Next week is the period when big balance sheets will arrive. The estimate is $4.31. The previous quarter was 5.33. So it is impossible not to pass this. I don't know why there is such a low estimate. This is, of course, also related to New Year's shopping. Because New Year's Eve advertisements also increase. But I don't think it will drop that much. Turnover of 40 billion dollars in the previous quarter, 36 billion dollars of turnover for this quarter. I think he will overcome this easily. I expect a superb balance sheet from Meta as well. Meta still has a long way to go technically.

Its valuation is not very expensive either. So it's worth taking a look at that, too. Yes, it looks like F in total, but PEG GAAP is 0.45 in the last twelve months, which means it is 27% behind the market average in terms of price divided by earnings divided by growth. PEG is 1.08 in non-GAAP forward view, again 18.52 below the market. Here, the last 12 months price earnings are 33.23 above the market, but when we look at a company like this that can grow and is profitable, the profitability is A+. In other words, a company with A+ growth in almost all categories. It's surprising that valuation has a B minus in PEG. So, I think this is the way forward, and under the same conditions, if we do not experience a general negative syndrome in the markets, I see a high probability of seeing a $600 level in Meta.

Alphabet was the stock that destroyed me last earnings season. Because, frankly, I was very hopeful about Alphabet, entering the balance sheet period. It didn't bring a bad balance sheet, but the stock collapsed. It retreated from $140 to $123, then recovered. We said goodbye to Google and Alphabet in the 130-140s. The reason is that I don't like Google management. So, I think the management is faltering on the artificial intelligence side, and that's why I have one basic principle regarding companies. Stock price action is not my main topic. How is the company managed? What is the future potential of these interests me? Google is of course a tremendous company. It's a super profitable company. But in this quarter, we will see Open AI, Tesla, small players, Microsoft, and now Amazon, attacking like a shark on this artificial intelligence side. He probably can't deal with them and I don't think his managerial quality will be enough to deal with them.

After my sale, Google technically moved upwards. All Time High did it. After that he retreated a little. The reason for the move is a bit technical, and they also released many products one after the other. They announced their Apple collaboration. They mobilized the stock. But my basic view on Google as a long-term investment is still cold. A great balance sheet, i.e. financials. There are indeed abnormal financial statements. 307 billion dollars turnover in the last 12 months. They have a gross profit of 175 billion dollars, a basic cost profit of 88 billion dollars, and an annual net profit of 73 billion dollars. Cash is flowing from Google. Nothing bad can happen, but I mean, my faith in Google for the future in this game has been shaken. I had great faith that you could achieve this job, but my belief was shaken. That's why I can't say anything about the price movement. But my faith was shaken.

On the other hand, if we put this issue of belief aside, the expectations are reasonable. Last quarter turnover was 86.13. This comes on April 25th. There is an expectation of 78 billion. I don't know why it's so low. So I think they will handle it easily. Earnings per share was 1.64 in the previous quarter. It also drops to 1.51. I don't think Google will have a problem with these. Where to focus on Google. In other words, what is really scary about Google is the share the search engine gets from the total. So the whole concern is whether there is a death toll in the search engine business. Because I wonder if artificial intelligence will replace the search engine. Now, in my own experience, I have a lot of artificial intelligence installed to replace Google, but my Google habit still continues. Frankly, it is not that easy to break that habit. I understand that. So these new environments, for example, even if I go to chat gpt and look for something there, my reflexes never improve. I use them a lot, but the first searches are still on my Google.

However, I still think that Google's search engine is backwards in terms of its design and the ugliness of the results it produces. I think artificial intelligence integration is far behind. Having said this, I still guess that Google will bring a good balance sheet. Let me tell you that too. It's not very expensive, Google, but it's not cheap either. Everything about Google is out there anyway. So he's not very good at anything. I think the growth side is good. I mean B, but not A Plus like that. Of course, profitability is amazing. It's not a company that would make you feel very sad, but it does have some constipation. Also, their Earnings Call Conferences are very bad. I mean, last time I was dying of boredom. You know, after listening to Nvidia CEO who is strong in artificial intelligence, this was the worst thing after Tesla. Let me put it that way, the balance sheet speech was maybe even worse than Tesla's.

For these reasons, I am not an investor in Google at the moment, but if you are an investor, let me tell you what you should pay attention to. You will pay attention to whether Search advertising is returning to rapid growth. Last quarter wasn't bad. They were afraid of this. Their YouTube is successful and they have no rivals. The second thing you should pay attention to is Google Cloud. How does Google Cloud's turnover grow from year to year? We will wonder about this. Google's Cloud growth was a little slow in the previous quarter, that is, in the 3rd quarter of 2023, and we were hit from there. Remember, the growth in Search advertising in the previous quarter, we suffered a goal due to the 22% advertising revenue in Meta, which was far below theirs. So there is always something to beat such a goal on Google. The stock market never liked Google, I don't know why. I guess this is because of the management's incompetence. That's why Google is something I don't like. But I have no claim that it will bring such a bad balance sheet or fall. But it is a stock that I do not prefer to go long.

The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.

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