Meta has significantly outperformed its peers
In the storm of DeepSeek that hit American listed artificial intelligence companies hard, Meta was at the center of the storm. Among the major listed artificial intelligence companies, Meta was one of the very few stocks whose stock price not only did not plummet but also hit a new high.
This article will attempt to explore the key factors that have contributed to Meta’s outperformance of its peers over the past few years.
Investors are short-sighted
During the Cambridge Analytica data scandal, after the scandal was revealed on March 17, 2018, Meta’s stock price fell by about 24% to a low of about $159.39 per share as of March 26, 2018, and then the price-to-earnings ratio of the stock price continued to During the long period when the P/E ratio hovered below 20 times, many people not only deleted their Facebook accounts, but investors also rushed to sell all their Facebook shares.
As of the end of December 2024, the daily active users of Meta family products were 3.35 billion. A report released by the International Telecommunication Union on November 27, 2024 showed that 5.5 billion people worldwide use the Internet, which means that 60.9% of Internet users log in to use at least one Meta family product every day.
This once again proves one thing: most investors are short-sighted. I remember that a reader of this blog communicated with me in the comment section at that time. He was the only one who thought that Facebook’s stock price was seriously undervalued and worth investing in when he went against the crowd. If this investor had taken action at that time, he would be reaping the rewards now.
Mark Zuckerberg
Founder Mark Zuckerberg still leads all operations of the company:
- Mark Zuckerberg just turned 40 this year. Unless something unexpected happens, based on past similar situations, he should lead the company for another 20 to 30 years.
- Mark Zuckerberg alone holds 13.68% of the shares and 61.2% of the voting rights of Meta’s shares. This means that Mark Zuckerberg is enough to represent Meta, and no one can stop him from doing anything. Statistical facts show that the stock price performance of listed companies where the founder serves as CEO, especially those who hold an absolute majority of shares, is usually much better than that of other listed companies. For this part, please refer to my previous two posts of “The more shares CEO owns, the higher stock return” and “Founder-CEO firms stock shown better performance“.
- Zuckerberg is the youngest CEO and founder of the seven largest technology stocks.
- Mark Zuckerberg has survived several major crises since the company went public, including several times when he was forced to step down. This is not easy.
- Zuckerberg once joked that when the company went public, he faced the media with no expression or body language, just like a robot. All signs indicate that Mark Zuckerberg is gradually maturing and becoming a qualified leader to lead a technology giant.
Excellent key operating indicators
With the company’s current market capitalization of nearly US$2 trillion, the worst quarterly growth rate in the past year was more than 19% revenue growth, which is a very difficult achievement to achieve., which is a very difficult achievement to achieve. Once again, Meta is now a company with a market value of nearly $2 trillion!
In addition, the company’s various profit margin indicators (gross profit, operating profit margin, net profit margin) and cash-related figures (free cash flow, operating cash flow, company cash and cash equivalents) also performed very well, fully demonstrating the management’s The team works hard and considers investors.
Embrace major technological trends
Cloud and mobile operations
Meta was born in the era of cloud computing and mobile computing, which gives it a big advantage.
Leading the technological trend
One of Mark Zuckerberg’s commendable qualities is that he always keeps an eye on emerging new technologies and startups that could become rivals, which brings immense value to Meta.
The tools Mark Zuckerberg used and earned to figure out how Instagram, WhatsApp, and TikTok are about to become the company’s biggest threats. Then it launched an acquisition war against Instagram and WhatsApp.
Immersive Experience
Meta is probably the company that has invested most actively in various technologies related to immersive experience among the current super-large technology companies. It includes:
- Acquisition of Oculus, 2014: Facebook acquired Oculus VR and continued to launch various immersive VR devices under the Oculus brand. Meta is currently the manufacturer with the largest market share in VR devices.
- Metaverse: Mark Zuckerberg launched the social VR world Facebook Horizon in 2019, announcing the company’s transformation to the Metaverse; since then, Mark Zuckerberg has almost become an evangelist for the Metaverse.
- Smart glasses: The first generation of Ray-Ban smart glasses was called Ray-Ban Stories and was released in 2021. Meta released the second generation of Ray-Ban Meta smart glasses on October 17, 2023. The second generation of Ray-Ban Meta smart glasses won unanimous praise from the market and technology circles. It can be said that it has performed well in all aspects so far. The best smart glasses.
To show his determination, Mark Zuckerberg even changed the name of the company to Meta Platform on October 28, 2021.
The company has invested a lot of money in its immersive experience department, Reality Labs, so far. As of Meta’s fourth-quarter financial report, Reality Labs’ operating losses since 2020 have exceeded US$60 billion.
AI
Facebook itself is a technology company with algorithms at its core. In the software world, algorithms are actually a typical type of artificial intelligence. Therefore, when Meta was founded, it was actually a company that made money through artificial intelligence.
“This year alone, improvements to our AI-driven News Feed and video recommendations have resulted in an 8% increase in time spent on Facebook and a 6% increase in time spent on Instagram,” Zuckerberg explained during the company’s third-quarter earnings call in October 2024.
At present, Meta’s investment in artificial intelligence resources, achievements, and determination should rank it among the top five large companies in the technology industry. The key point is that Meta has been investing in artificial intelligence. , while integrating the results into its products without any subtlety; users can’t even notice it; because Meta has always been a natural artificial intelligence company and money-making machine.
Meta will invest $60 billion to $65 billion in capital expenditures through 2025 to expand its AI-related computing infrastructure. Amazon is $100 billion, Alphabet and Microsoft are $75 billion and $80 billion, respectively. The difference between Meta and them is that Meta lets investors see that AI capital expenditure brings revenue to the company, while on the other hand, it cuts costs without hesitation, continuously cuts a large number of manpower, and recruits AI talents instead.
Evolving PR
After several setbacks, including the Cambridge Analytica data scandal, Trump’s ban on the Capitol riots, the EU’s strong regulation, and restricted access to the Apple platform, the company’s revenue and market value have been severely damaged.
With the guidance and assistance of Bill Gates, Meta has successfully established a close partnership with Microsoft that goes beyond the average business over the past few years.
As for TikTok, which has no chance of being acquired, Meta continues to launch a public opinion war, lobbying, and political warfare in the United States through multiple channels, using the United States and various means to help Meta eliminate TikTok, the number one threat.
With such strength, Mark Zuckerberg dared to publicly break up with Apple several times, and Meta is indeed the number one warrior against Apple on the surface.
Operational Efficiency
In addition to the common practice of reducing costs to increase profits, such as slashing costs and tightening budgets. With the successful implementation of a large number of layoffs in 2023, the company’s profitability jumped directly, which was highly praised by Wall Street. After tasting the sweetness of a sharp rise in stock prices, Meta continued to work hard and directly defined 2024 as the company’s “Operational Efficiency ” year.
Mark Zuckerberg has made it clear several times in company-wide all hands meetings that “many of you should not be here.”
On January 9, 2025, Zuckerberg spoke to over 70,000 employees during an hour-long online all-hands meeting, outlining Meta’s strategic priorities for 2025, Meta CEO Mark Zuckerberg told employees in the Q&A session “its going to be a crazy year.”
The company had already stated in February 2024 that Meta would no longer recruit on a large scale and would maintain a “relatively minimal” size. Mark Zuckerberg then made the “Year of Efficiency” strategy permanent in March 2024, putting Meta employees in a state of panic that they could be laid off at any time; thereby achieving the goal of improving financial figures and enhancing work efficiency.
This is not enough; the media has revealed that Meta is merging Facebook and Messenger into one department, and will once again lay off 5% of its global staff in February 2025, marking the third consecutive year of workforce reduction. Seeing the success of Meta’s strategy, Alphabet immediately followed suit in February 2025, announcing that the company would focus on speed and efficiency, and more than 25,000 employees were laid off.
Extending the depreciation period of assets
Starting in January 2025, Meta made a small adjustment to the financial details, but this imperceptible adjustment could drive billions of dollars in profits in 2025. This wasn’t because Meta released a new product or drastically cut costs, but rather because it tweaked the accounting formula it uses to measure depreciation of its expensive AI infrastructure.
The minor adjustment, disclosed in earnings documents on Jan. 29, extends the useful life of certain artificial intelligence server and network infrastructure assets to 5-1/2 years from the previous four to five years. While this sounds insignificant, the impact of such an adjustment on corporate earnings will be significant given the large investments in these relatively short-lived assets, so higher profit expectations are expected to further boost Meta valuations.
According to calculations based on Meta’s financial disclosures, this minor detail adjustment is expected to reduce the company’s depreciation expenses by approximately $2.9 billion in 2025, which alone accounts for nearly 4% of the company’s estimated annual pre-tax profits. The impact on Meta’s profits in 2026 will be even greater as Meta’s management, led by Zuckerberg, plans to increase capital expenditures by up to 75% this year to expand its AI capabilities, and lay off a large number of underperforming employees while recruiting AI professionals to dominate the artificial intelligence race.
Beneficiaries of the DeepSeek shock
During the Chinese Lunar New Year in 2025, global technology stocks plummeted, forcing OpenAI and all related technology companies to change their business strategies. The U.S. government felt threatened and planned to ban DeepSeek, an artificial intelligence company from China. Meta should be the first large technology company to realize that DeepSeek’s amazing achievements may subvert the future development of artificial intelligence. Meta even immediately set up a combat department in the company to formulate subsequent response strategies.
Like DeepSeek, Meta’s Llama series of AI models are open source. DeepSeek’s AI model shocked the industry, and Meta was seen as a beneficiary. Meta shows a different attitude from other tech giants and is the only company among the seven tech giants to adopt an open source AI model. Ultimately, DeepSeek’s success convinced the skeptics that an open source model should accelerate AI development and bring Meta a faster return on investment.
As the famous Silicon Valley investor Marc Andreessen said: “Closed source, opaque, censorious, politically manipulative vs open source and free is not the winning position the US needs.” The whole world will be able to benefit from the low-cost and efficient AI products developed by DeepSeek. Embrace competition from China, rather than reject it.
Share outperformed over the past two years
It is because of the above reasons; coupled with the company’s implementation of operational optimization. The company’s stock price rose 194% in 2023, while the S&P 500 index only rose 24% during the same period. The company’s stock price rose 70% in 2024, while the S&P 500 index only rose 25% during the same period.
As of February 13, 2025, Meta has risen by 21.05% since 2025, and its stock price has risen for 18 consecutive trading days, setting a record for the longest consecutive increase since its listing; the stock price has risen by nearly 700% from the bottom in November 2022!
With such achievements, among the seven major technology stocks, only the newly emerging Nvidia can beat Meta in terms of stock price performance in the past two years! Please note that among the major US AI software companies listed in Table 1, Meta has the best revenue growth rate and net profit growth rate in the most recent quarter.
Comparison of key operating figures between Meta and peers
| Ticker | Gross margin | EBIT margin | Net margin | Cash flow margin | ROE | Per employee contribution ($K) |
| AMZN | 48.85% | 10.75% | 9.29% | 7.00% | 24.29% | 38.08 |
| CRM | 76.94% | 19.75% | 15.96% | 35.51% | 10.18% | 81.66 |
| GOOGL | 58.20% | 32.11% | 28.60% | 15.84% | 32.91% | 546.13 |
| META | 81.68% | 41.47% | 37.91% | 21.94% | 37.14% | 841.94 |
| MSFT | 69.41% | 44.96% | 35.43% | 19.85% | 34.29% | 406.8 |
| ORCL | 71.26% | 30.88% | 21.16% | 16.78% | 132.00% | 73.11 |
| PLTR | 80.25% | 10.83% | 16.13% | 32.28% | 10.90% | 118.75 |
| SAP | 73.19% | 23.89% | 9.14% | 19.80% | 7.05% | 29.66 |
I am the author of the original text, the essence of this story was originally featured on Smart Magazine, Issue of March 2025
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