Meta Platforms (META, Financial) (formerly known as Facebook) detracted from performance during the quarter. Meta’s core Family of Apps revenue grew +10% (currency-adjusted) over 2021 and are up almost +60% over the past 2 years as pandemic-driven behavior has driven an influx of advertisers to Meta’s platforms. Meta’s stock trades close to just 12X consensus estimates for 2023, which is a substantial discount to the market and very attractive for a business that has monopolistic type returns on capital. Meta’s returns are particularly impressive, given that nearly all the Company’s growth over the past five years has been through organic, internal research and development initiatives. For example, nearly half of user engagement is dedicated to consuming video content, compared to just a fraction of that just five years ago. Meta effectively built user product rivals to both TikTok and Snapchat and is quickly scaling them across Meta’s over 3 billion daily users. Over that time frame, Meta has doubled revenues and maintained returns on invested capital well above +20%. We continue to think the Company’s competitive positioning and attractive valuation makes it a rare asset deserving of a top weighting in the portfolios.
From David Rolfe (Trades, Portfolio)'s Wedgewood Partners second-quarter 2022 letter.
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