Meta Platforms, Inc. (META): A Bull Case Theory

We came across a bullish thesis on Meta Platforms, Inc. (META) on Rebound Capital’s Substack. In this article, we will summarize the bulls’ thesis on META. Meta Platforms, Inc. (META)’s share was trading at $694.14 as of 11^th June. META’s trailing and forward P/E were 27.46 and 27.78 respectively according to Yahoo Finance.

Meta’s dramatic fall from grace in 2022, with its market cap plunging from nearly $1 trillion to just $230 billion, was driven by a confluence of cyclical and secular challenges. Internally, Meta reported its first-ever drop in daily active users and doubled down on a costly, uncertain Metaverse pivot, pouring nearly $30 billion into Reality Labs with little return.

Externally, Apple’s iOS privacy changes slashed Meta’s ad targeting ability, costing an estimated $10 billion in lost ad revenue, while competition from TikTok siphoned user engagement. Macro conditions further compounded these issues, as rising interest rates and recession fears pressured advertisers and drove investors toward safer assets. Revenue declined 1% and net income fell 41% in 2022, but even in this difficult environment, Meta’s core business remained robust.

The Family of Apps delivered a 37% operating margin on $114.5 billion in revenue, supported by a fortress balance sheet with $30 billion in net cash and $27.9 billion in buybacks. While the capital allocation into the Metaverse raised concerns, Zuckerberg’s strategic pivot in late 2022 marked a turning point. The “Year of Efficiency” in 2023 brought aggressive cost cuts, two major layoffs, and a $40 billion buyback.

By year-end, OpEx came in 8% below plan, margins improved, and Reels achieved $10B+ ARR. Threads launched, monetization accelerated, and management regained credibility. The comeback culminated in early 2024 with Meta’s first dividend, a $50 billion buyback authorization, and a single-session market cap gain of $200 billion.

Investors who endured the pain were rewarded with a 400% rebound—proof of resilience, strong fundamentals, and a responsive management team. The rebound was so spectacular that even if you bought the stock in March 2024, you would still have doubled the return of investing in the S&P 500.

Previously, we highlighted a bullish thesis on Meta Platforms (META) by LongYield on Substack in May, focusing on its strong Q1 results, AI-driven ad innovation, and high-margin growth. The stock price has appreciated by roughly 21% since our recent coverage. Rebound Capital complements this thesis with a broader narrative of Meta’s dramatic 2022–2024 rebound, emphasizing management’s strategic agility, cost discipline, and capital returns, together painting a picture of a resilient, undervalued tech leader with long-term upside.

Meta Platforms, Inc. (META) is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 273 hedge fund portfolios held META at the end of the first quarter which was 262 in the previous quarter. While we acknowledge the risk and potential of META as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.