My thesis is that Meta(Nasdaq: dead) faces challenges with richesse indemnité as prominent investors embarras their metaverse approach. Overall, Meta has a huge earning power but it is appréciable not to waste that with poor richesse indemnité decisions. dead He needs to make the right richesse indemnité decisions at the right time in terms of re-investing in the négoce, making acquisitions, repurchasing shares and issuing dividends.
2021 10 K It shows that Reality Labs parcelle operating income has increased from $6,623 million on revenue of $1,139 million in 2020 to $10,193 million on revenue of $2,274 million in 2021. Meanwhile Same, Apps parcelle operating income increased from $39,294. $84,826 million on revenue in 2020 to $56,946 million on revenue of $115,655 million in 2021.
Looking at the numbers for the six months to June 2021 vs. June 2022 from Q2 22 ReleaseReality Labs’ parcelle went from operating income of $4,259 million on revenue of $839 million to operating income of $5,766 million on revenue of $1,146 million. Meanwhile, the Apps Family parcelle moved from operating income of $28,004 million on revenue of $54,409 million to operating income of $22,647 million on revenue of $55,583 million.
These operating losses from the Reality Labs parcelle are staggering, reaching a additionnelle $22.58 billion from January 2020 to June 2022. [$6,623 million + $10,193 million + $5,766 million]. It’s scary that these losses increased by $3.57 billion from 2020 to 2021. Meta has massive chance power but its richesse indemnité options involving the Reality Labs parcelle are called into embarras. Famous investor Bill Gurley recently chirp On Meta spending $10 billion on a trip he said should have been written off:
I think Meta should consider a small earnings release. The payout rapport doesn’t have to be high but the négoce is raisonnable enough to return some money to shareholders in this way. Some say companies arrêt innovating when they have to return richesse on a regular basis through dividends, and Apple (AAPL) is cited as an example. I do not agree with this premise bicause some of the world’s most innovative companies such as ASML (ASML) and TSMC (TSM) regularly return richesse to shareholders with dividends.
Apple’s 10-K through September 2021 shows a dividend payment of $14.5 billion in its cash flow statement on net income of $94.7 billion and cash flow from operations less stock-based soulagement (“SBC”) and richesse expenditures of $85 billion. The 2021 Meta 10-K shows net income of $39.4 billion and cash flow from operations minus SBC and richesse expenditures of $29.9 billion. I think Meta should commit to paying out a relatively small dividend of $1 billion annually. This low number will save them a lot of money to reinvest in the négoce, make acquisitions and buy back shares.
If Meta sticks to a dividend policy of at least $1 billion a year, conduite will be more constrained than it is now in terms of financial decisions. Restricting CEO Zuckerberg’s richesse indemnité decisions might be absurd considering those who questioned his billion-dollar takeover of Instagram image ridiculous now. However, times have changed and a small dividend of $1 billion per year will still give him plenty of firepower to do what he believes is best for shareholders with the remaining money generated annually.
Looking at 2Q22 10-Q and 2021 10-K, the twelve-month net income (“TTM”) is $33,630 million or $14,152 million + $39,370 million – $19,892 million. Given the way Meta has proven its ability to rapidly increase net income over the years, I believe the company deserves a higher TTM net income proliférer. A net income proliférer of 18 to 22 times seems reasonable indicating a valuation range of $605 to $740 billion.
2Q22 10-Q shows 2,280,672,002 Class A shares and 406,876,470 Class B shares as of July 22 for a seigneur complet of 2,687,548,472. Multiplying this by the August 19 denrée price of $160.32, we get a market capitalization of $431 billion. The value of the enterprise is less than the market value of which it considers cash and marketable securities more than the outweighs of debts and leases. Given these considerations, I believe the denrée is a long-term buy if conduite can avoid making poor richesse indemnité decisions.
Disclaimer: No material in this passage should be relied upon as an official investment recommendation. Never buy a denrée without doing your own thorough research.