Key insights
- The author argues Meta is building a cloud business similar to AWS, currently used internally but with potential for external sales. High capital expenditure supports this expansion. They believe the market undervalues Meta due to concerns about its ad business, creating a buying opportunity as Meta's growth outpaces the market while trading at a discount.
Meta is literally building a neocloud business under everyone’s nose similar to how Amazon built AWS.
Currently all resources are being ‘sold’ internally but if you look at the capital investment how is it not obvious that they are building as much supply as possible leveraging their balance sheet and cash flow to grow an entirely new business unit at massive scale.
Look at Amazons commentary on the chip revenue they could gain if they sold trainium externally instead of for internal use - this is the same thing happening within Metas cloud infrastructure but people are worried about the ROI on their ads business.
Discount to market multiple is a complete dislocation.
Edit: see comments below for where sentiment is on the stock. Unloved, priced cheaper than market multiple and growing faster than the market. Fat pitch.