Founder @coinbureau | Host @FinanceBureau_ | Ex @GoldmanSachs | Mensa | Posts not financial advice |
Joined May 2012
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META stock is completely tanking!
It's down 6.5% on open & over 15% on the week.
It's lost over $115 Billion in market value today.
As I pointed out earlier, the AI spend commitments completely consumed the positive Ad revenue.
Growth at any cost comes with costs.
Meta *is* making record revenue but AI is eating right through it.
Ad revenue surged to $63.1B, yet it's now planning $135B–$145B in 2026 capex.
Despite generating $32.8B in operating cash flow, free cash flow turned negative at -$2.1B.
Add Reality Labs' billions in losses since 2020 & the scale of the spending becomes hard to ignore.
Meta Ads is still bringing in billions, but its investment demands have overtaken that cash generation.
My opinion:
Muse monetisation is still uncertain & it didn't help that there was no FY2027 revenue guidance.
There's little clarity on when these AI investments will actually pay off.
The longer that takes, the harder it becomes to justify the scale of that level of spending;
Brutal report on CoreWeave.
- LLM Revenue growth slowing
- ROIC of 8.9% below cost of borrowing
- Revenue per MW is 30% below hyperscalers
- 2028-2030 EPS 50-70% below consensus
Meanwhile, its bonds trade as junk, CDS spreads record highs & $CRWV down 67% since highs.
What happens if it gets worse?
Very likely a bailout.
Nvidia may be the most likely candidate given Jensen's commitment to it.
But, this would be an admission that Nvidia has just been buying their own product all along...
News of a major escalation with Iran appears to be circulating.
So, let's just take a moment to appreciate this tweet from almost 16 years ago.
Prophetic.
Meta *is* making record revenue but AI is eating right through it.
Ad revenue surged to $63.1B, yet it's now planning $135B–$145B in 2026 capex.
Despite generating $32.8B in operating cash flow, free cash flow turned negative at -$2.1B.
Add Reality Labs' billions in losses since 2020 & the scale of the spending becomes hard to ignore.
Meta Ads is still bringing in billions, but its investment demands have overtaken that cash generation.
My opinion:
Muse monetisation is still uncertain & it didn't help that there was no FY2027 revenue guidance.
There's little clarity on when these AI investments will actually pay off.
The longer that takes, the harder it becomes to justify the scale of that level of spending;
So, just so we're keeping track.
Last week Jensen was telling everyone that Coreweave was "improving every day" and he was "optimistic".
And this week, he's bailing out Firmus after they pulled their IPOs.
Why does Nvidia need to bail out these Neoclouds if they're so sound?
The US is tapping its final diesel lifeline: The Emergency Reserve.
This reserve was used only once before, during Hurricane Sandy in 2012 - an ACTUAL national emergency.
Now, the admin is releasing 315,000 barrels in an attempt to bring prices down.
There's one problem though...
315k is barely a dent in the market.
The East Coast alone consumes around 1.2 million barrels a day.
Trump is clearly desperate and it shows.