The above image of a telephone booth highlights the essence of Meta Platforms (NASDAQ:META) as a communication services provider. It also gets to the heart of the matter, which is the manner in which we communicate, as well as the platforms we use to communicate, fundamentally change through time.
While the notion of a metaverse is much maligned, I have no doubt that the broad concept represents the future of communication. As to when and how it evolves remains an open question. Given Meta’s massive user base of 3.74 billion people, the company is one of the best positioned to capitalize on a fundamental shift in communication platform technologies.
The key question is will Meta be a dominant communication platform in the future?
Performance Review
At the time of our March 17, 2022 Meta report, “Meta Platforms is an asymmetric innovation opportunity”, the consensus earnings estimate for 2022 was $12.42 per share and Meta was trading at 15x estimates. As this multiple was quite low in relation to consensus growth estimates, its was clear that the market was pricing in a miss to expectations. The following is how I summarized the situation at the time (emphasis added):
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