Mark Mahaney on Meta's Earnings: Why He Likes the Stock Despite Concerns

Meta's Earnings Outlook

• 📉 Meta shares have seen a 27% decline from their February peak, with investor concerns heightened by recent results from Google and Snap regarding the advertising outlook.
• 📊 Mahaney anticipates a lowered bar for Meta's earnings, expecting guidance for the June quarter to have a broader range (three to four billion dollars) than usual.
• 💰 He does not expect Meta to withdraw its full-year capex guidance, which is projected to remain between $60-65 billion, though some expense guidance might be reduced.

Why Mahaney Likes Meta Stock

• 💡 At less than 20 times earnings, Mahaney believes Meta is a nicely dislocated and high-quality asset that will perform well regardless of later-year events.
• 🎯 Meta is identified as one of the two largest performance marketing direct response advertising platforms, where companies pay only for sales, providing resilience.
• 🧩 Ad inventory is considered fungible and substitutable, not dependent on specific keywords or content, allowing Meta to shift focus to stronger verticals like financials, media, entertainment, and gaming.

Addressing China Exposure and TikTok

• ⚠️ Concerns about Meta's China exposure are seen as overstated; while about 10% of revenue comes from Chinese companies, these firms sell globally, not just to the US.
• 🌍 Even if sales to the US are impacted, Chinese companies use Meta to reach markets in Europe, Latin America, and other regions.
• 🚀 A potential ban on TikTok in the US could indirectly benefit Meta by creating a source of funds and reducing competition.

Regulatory Landscape

• ⚖️ The DOJ's antitrust case against Meta is considered weak, with significant competition evident in the social media landscape (e.g., Facebook vs. TikTok).
• 🧐 Mahaney finds it odd that a case against Google wouldn't list TikTok as a competitor, suggesting a potentially flawed antitrust argument.
• 📈 While regulatory issues are a risk, Mahaney believes they are more than priced in at Meta's current stock level, with Google facing greater regulatory headwinds.