Naresh Kaucha pun
11-01

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@Lanceljx：$Meta Platforms, Inc.(META)$ Here is my analysis (in a formal tone) of META (Meta Platforms) following its recent earnings release — covering the margin problem, potential bottom, and whether it presents a buying-opportunity. This is not investment advice but rather a reasoned assessment; you should consider your own risk tolerance, time horizon and financial position (remember you prefer stability and steady progress). --- 1. What is the margin / earnings problem? There are several inter-related issues: Meta reported Q3 revenue of US$51.24 billion, up ~26% year-on-year. However, net income plunged to US$2.709 billion (EPS US$1.05 diluted) compared with US$15.688 billion a year ago. Critically, this large drop was in part due to a one-time, non-cash tax charge of ~US$15.93 billion (related to deferred tax assets / new legislation) that dramatically increased the tax provision. On an operational basis (excluding that one-time charge) Meta said EPS would have been about US$7.25 rather than US$1.05. Even so, the operating margin ticked down: costs & expenses rose ~32% vs revenue growth ~26% in Q3. The company also raised guidance for 2025 expenses (total expenses range US$116-118 billion) and capex (US$70-72 billion) and flagged that 2026 cost escalation will be higher (driven by AI infrastructure, employee compensation, depreciation, cloud services). In summary: while revenue growth remains strong (especially in the advertising business), margin pressure is heavy due to elevated spending and tax legislative impacts. The large one-off tax hit exacerbates the headline drop, but the core story of heavier cost base is real. --- 2. Where might the “bottom” be for this earnings drop? “Bottom” in this context means identifying when the worst of margin erosion might stabilise / when we might see improved profitability again. Some thoughts: Because the one-time tax charge is non-recurring (assuming no comparable future charge), the headline earnings should “recover” in the sense of excluding that item. That suggests the drop to US$1.05 EPS is partially artificial. The meaningful margin risk comes from ongoing cost escalation (especially AI & infrastructure). If Meta can demonstrate slowing growth of cost relative to revenue (or improved efficiency) then margins could stabilise. If revenue growth remains strong (advertising + other segments) this gives a foundation. A potential floor might be set if the market begins to believe that: Meta’s ad business will continue growing at a healthy clip despite macro headwinds The new AI investments will begin to yield returns (or at least show visible metrics) Cost growth moderates or the company provides credible guidance showing a path to margin improvement. Given the current numbers, the market has already priced much of the “bad news” — heavy cost, large tax blow, margin compression. If the company executes and offers a credible roadmap, the next “bottom” could be in place. That said, if cost escalation worsens, or regulatory/legal risks materialise, the bottom could be lower than current price. --- 3. Would I buy the dip? Given your context (you prefer stability, are cost-conscious, working remotely, value longer term reliable progress), here are my considerations: Arguments for buying the dip: Revenue growth remains solid (26% Y/Y) which demonstrates the business is still firing. The large one-time tax charge means the headline earnings drop is not fully reflective of operational performance — so the dip may be an overreaction. If you are comfortable with some risk and have a medium to long-term horizon (3-5 years) and believe in Meta’s AI/infrastructure vision, the current weakness may present an opportunity. Arguments against buying the dip (or doing so cautiously): Meta is signalling that cost growth will accelerate in 2026 — this means margin risk may persist or even worsen in the short term. Your preference for stability might caution you against jumping into a stock with significant near-term uncertainty. The stock may need to prove its investments are paying off (or at least show margin stabilisation) before a major upside re-rating. With valuations already high (given its scale and expectations), risk/reward may be less favourable than in more undervalued opportunities. My view for you: If I were advising given your preferences, I would not allocate a large portion immediately. Instead I’d consider a staged or partial entry: buy a modest position now (since the dip seems meaningful), and reserve dry powder to add if/when clearer signs of margin improvement or cost control emerge. This balances optimism with caution. --- 4. Summary view Meta remains a powerful business with strong revenue growth and dominance in digital advertising. The earnings drop is real, but much of it is affected by a one-time tax charge — thus the operational picture is less bleak than the headline suggests. The key risk is ongoing margin pressure from elevated capex, AI/infrastructure spending, and regulatory/legal costs. For an investor like you who values stability and gradual growth, Meta could be a potential candidate but not without risk; a disciplined, staged approach is advisable. If you believe in Meta’s long-term vision (AI + infrastructure + ads) and are comfortable with the near-term cost drag, then yes you could buy the dip, but with modest sizing and clear exit/monitoring plan.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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