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Stock Market Big Guns Firing on all Cylinders

April 27, 2023

Investors have been worried that the US stock market has been kept afloat by shares in some of the biggest companies, the so-called mega caps. It turns out this is not a problem because these giant companies are in rude health.

One of the most exciting is a household name business with a global reach that would have stunned earlier generations of investors. In the past they thought they had big companies. It turns out they had no idea. It’s like Crocodile Dundee in the eponymous film – call that a knife. Well, now we have serious knives; Dundee would have been impressed.

AI is perfect for these guys. They have the reach in terms of customers, they have the raw computing power, which is becoming more staggering by the day, they have the data which is pouring through their systems like a tsunami gathering height and mass and they have the talent in-house (not so many as they used to have after the recent blood-lettings) but they are still magnets for the finest young minds on the planet.

Let’s have a closer look at one of these super stars and what it is that makes it so exciting.

Never underestimate Mark Zuckerburg

The company, which has been featured several times this year in Quentinvest, is steadily picking up momentum.

This was a good quarter and we’re seeing growing momentum in our products and business. Our community reached the milestone that now more than 3bn people use at least one of our apps each day. Facebook also reached the milestone of 200m daily actives in the U.S. and Canada after last quarter reaching 2bn daily actives worldwide.

Q1 2023, 26 April 2023

What we are looking at here, to coin a phrase, is Facebook, Mark 2

When we started this work last year, our business wasn’t performing as well as I wanted. But now we’re increasingly doing this work from a position of strength. Even as our financial position improves, I continue to believe that slowing hiring, flattening our management structure increasing the percent of our company that is technical, and more rigorously prioritizing projects will improve the speed and quality of our work. I also believe that a stronger financial position will enable us to weather a volatile environment, while remaining focused on our longer term priorities. 

So far, we’ve gone through two of the three waves of restructuring and layoffs that we have planned for this year, in our recruiting and our technical groups. In May, we’re going to carry out our third wave across our business groups. And this has been a difficult process. But after this is done, I think we’re going to have a much more stable environment for our employees. And then for the rest of the year, I expect us to focus on improving our distributed work model, delivering AI tools to improve productivity and removing unnecessary processes across the company.

Q1 2023, 26 April 2023

There is a new product called Reels, which is barnstorming along.

Reels continues to grow quickly on both Facebook and Instagram, Reels also continue to become more social with people resharing Reels more than 2bn times every day, doubling over the last six months. Reels are also increasing overall app engagement, and we believe that we’re gaining share in short form video too.

Q1 2023, 26 April 2023

AI is starting to have a huge impact at Facebook (Meta Platforms)

Since we launched Reels, AI recommendations have driven a more than 24pc increase in time spent on Instagram. Our AI work is also improving monetization. Reels monetization efficiency is up over 30pc on Instagram and over 40pc on Facebook quarter-over-quarter. Daily revenue from Advantage+ shopping campaigns is up 7x in the last six months.

Q1 2023, 26 April 2023

Business messaging is also roaring away.

Our work to build out business messaging as the next pillar of our business is making progress too. I shared last quarter that click to message ads reached a $10bn revenue run rate. And since then, the number of businesses using our other business messaging service paid messaging on WhatsApp has grown by 40pc quarter-over-quarter. Our success here depends on delivering results for other businesses, and at our scale that can have macroeconomic effects.

Q1 2023, 26 April 2023

These guys are just getting started with AI.

I think that there’s an opportunity to introduce AI agents to billions of people in ways that will be useful and meaningful. We’re exploring chat experiences and WhatsApp and messenger, visual creation tools for posts and Facebook and Instagram and ads, overtime video and multimodal experiences as well. I expect that these tools will be valuable for everyone from regular people to creators to businesses.

Q1 2023, 26 April 2023

A business in great shape with strong momentum

We’re seeing good momentum in our products and business. We have incredibly exciting opportunities ahead in our Family of Apps, AI and the Metaverse. I’m confident that our efficiency work will improve our ability to execute on all of this.

Q1 2023, 26 April 2023

This was a very positive report by a very exciting company so let us have a look at the chart.

I have shortened the scale on this chart, three months for each candlestick instead of 12 months to show that we have a clear buy signal, a golden cross on the moving averages and also Coppock turning higher from a negative level.

The chart is explosive

This share is on fire, up from $89 to $239 in just six months. Many people’s reaction would be that it is too late to buy. I never thing like that. In the grand scheme of things that explosive behaviour is itself a massive long term buy signal suggesting that much higher levels lie ahead for these shares.

Many people thought that Zuckerberg was losing the plot with his adventures in the Metaverse. It turns out that is not the case and the footprint of this company is breathtaking. Two billion daily actives worldwide. It would not be surprising if it turns out that the company is still in the early innings of monetising this incredible opportunity.

Strategy

I imagine that Reels is a rip-off from Tim Tok but that is what these giant companies can do and why it is so hard to compete with them once they are established.

Instagram Reels is a brand new Instagram feature for users to create 15-second video clips set to music and share to their Stories, Explore Feed, and the new Reels tab on a user’s profile. 

Similar to TikTok, Reels is the latest video feature on Instagram and is now available in the United States and 50 other countries. 

Instagram Reels has its own version of the For You page: the new Reels Explore Feed. You can find the Reels feed on the Instagram Explore Page. Instead of only seeing Reels from accounts you follow as you scroll, you will see Reels from popular and trending accounts on Instagram.

While the Reels algorithm hasn’t been locked down yet, it feels similar to the TikTok For You page. It’s likely influenced by who you already follow, what content you interact with, and where you’re located.

As you’re scrolling, you may notice some Reels have a “Featured” label above the caption.

According to Instagram, “If your reel is featured in Explore, you’ll receive a notification. Featured reels are a selection of public reels chosen by Instagram to help you discover original content we hope will entertain and inspire you.”

Influencer Marketing Hub, 2023

It shows something important which may have a lesson for other mega caps, whenever they seem down and out. Facebook/ Meta Platforms is indestructible.

Share recommendations

Meta Platforms META. Buy @ $239

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