Return to: Q4 2025 Meta Platforms Earnings | Meta Platforms

Key topics: Declining cash flow generation due to rising Capex | Meta Platforms Quarterly Developments

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Experimental Format. We might change the format over time based on best workflows for us.

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Decision

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Briefing

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Questions

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Aron

Reduce Meta Platforms by 10% immediately after Q4 2025 earnings if:

• Capex (weight: 70%):
  • 2026 Capex: If management guidance for 2026 exceeds my estimate of $120 billion. Market expects $110 billion but it may not be a surprise if management guides it to $120 billion.
  • If management signals 2028 is not Capex peak.
• Revenue: If there are signs that Meta’s advertising is deteriorating i.e. gains from ad recommendation models is losing steam. For instance, if Q1 2026 revenue growth guidance comes significantly below my estimate of 21% i.e. management guiding mid-point revenue growth of 17% or less may cause meaningful negative market reaction (Weight: 65%).
• AI: If management commentary signals Meta’s MSL is still far away from releasing new LLMs. For instance, if there are indications the new LLMs may not be released in H1 2026 (Weight: 60%).
• DAUs and impressions: If DAUs growth rate is low i.e. below 3% as it may signal negative impact from rising ad loads. Also if impressions decline or growth rate deteriorates significantly from the 10% observed in Q3 2025: (weight: 45%)
• Total expenses: If total expenses guidance for 2026 exceeds $155 billion (weight: 40%) (2025: $116-118 billion) 162 -169 billion

Reduce Meta Platforms by 20-25% immediately after Q4 2025 earnings if:

• Capex (weight: 70%):
  • If management guides 2026 Capex of more than $130 billion.
  • If management signals 2027 will see another “meaningful or significant” growth in Capex
  • Data centers amounting to more than 50 GW by 2030: If management indicates they plan to build data centers in the scale of Hyperion (costing around $15 billion by GW) and amounting to more than 50 GW by 2030.
• Revenue: If management guides Q1 2026 revenue growth rate of less than 13% at the midpoint (weight: 65%).
• AI: If there are announcements that key MSL executives are leaving or that new LLMs will arrive next year instead of this year (weight: 60%).
• DAUs and impressions: If DAUs and impressions start declining (weight: 50%).
• Any other very senior executives departures especially CFO. Li may not agree with Capex trajectory given she seems to value cash flow generation (weight: 65%).

Avoid reducing if:

• Capex: Capex guidance for 2026 is below $115 billion and if management signals 2028 is Capex peak (weight: 70%)
• Revenue: Mid-point revenue growth rate guidance for Q1 2026 is above 18% (weight: 65%).
• AI: Positive commentary on MSL’s executions (weight: 60%).
• DAUs and impressions: DAUs growth of more than 5% in Q4 2025 and impression growth of more than 9% (weight: 45%).
• Total expenses mid-point guidance is below $150 billion (weight: 40%).

Other considerations

• We need to decide if reducing by 10% outweighs the tax cost or not.
• Whether Meta Platforms position is now balanced at current price or if the stock moves down by maybe $100: ‣ | https://forum.investmentwiki.org/t/meta-platforms-portfolio-changes/233/6?u=aron
• Weigh if we are contented with share volatility in the next one or two years during compute buildout phase. This depends on commentary on capex during the earnings.

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