Hi YXI friends,

The YXI Profile aims to provide a complete overview of the asset's historical fundamentals, forward estimates, and quantitative characteristics.

It may be particularly relevant to long-term investors who want to look past the daily noise and news headlines and understand how their assets behave over the long term.

All of the charts in this note were developed using proprietary analytical tools to provide a unique set of insights for YXI Premium subscribers.

We update this note every quarter, one business day after the earnings report. The goal is to create a long-term rolling report on the asset so you can easily look back on what happened before.

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

META’s revenue has accelerated two quarters in a row. There has definitely been a positive financial impact from AI (in the form of squeezing in more ad impressions on its platforms and keeping users in longer).

At 26% YoY growth, META can be classified as a “growth stock” - something GOOGL and MSFT cannot claim.

However, given the huge amount of money being poured into AI-related CapEx, investors have a very high expectation. They want to see the growth speed of 2016-2018 or early 2021.

Or that money is poured down the drain.

META’s TTM revenue is at 21%.

META’s profit margins are VERY high across its Gross, EBITDA, and Free Cash Flow metrics. However, the FCF margin has dropped substantially from 12 months ago.

META’s EBITDA growth has slowed from early 2024.

The EPS declined in Q3, accompanied by a massive post-earnings stock price selloff.

This chart worries investors the most. META spends 37% of its quarterly revenue on CapEx, a near doubling of the 2023-2024 figures.

META’s CapEx in dollar terms has grown by 128% YoY. Will this investment pay off financially? That’s the trillion, yes trillion, dollar question.

Due to heavy CapEx, META’s cash position has declined substantially - 76% lower than a year ago.

And they no longer splash out on the share repurchases.

On average, META is granting SBC at a similar pace to its revenue growth. It’s not alarming yet.

Here are the key financial metrics from the past four quarters. I have designed the table this way so we only focus on the key top-line, profit, and cash flow metrics.

Here are Wall Street's forward estimates.

Wall Street’s NTM estimate is only a 19% revenue for META, which is both lower than its current pace but also the big expectation from AI monetisation.

At the same time, Wall Street estimates that META will spend nearly half of its revenue in CapEx next year!

I do think revenue growth expectation is too low, but META won’t get welcomed back to investors’ hot list unless the growth number accelerates to 30% or so. Or they rein in the CapEx.

Here are the summary valuation metrics over time, including the NTM metrics (using today’s share price).

META’s EV/Sales and EV/ EBITDA took the opposite direction from GOOGL. They have declined by a third since a year ago.

META’s valuation looks in line with its 3-year norm.

On a growth-adjusted basis, META’s EV/ Sales looks reasonably priced.

META’s EV/ EBITDA appears slightly expensive on a growth-adjusted basis. So it’s not quite a big bargain just yet.

META has declined 5 months in a row (assuming we close December where we are today). The closest match was the end of 2018, with 4 consecutive down months. 2019 opened with a huge positive January (+27%).

META’s +10% YTD is the third worst year of the past decade.

However, the current drawdown is not as severe as the post-IPO, 2018, 2022, and the March 2025 drawdowns

META trades with a moderately positive correlation to SPY but neutrally to TLT on a rolling 90-day basis.

December tends to be quiet for META. The February full-year reporting season is the most volatile.

In terms of follow-throughs, META does best 3 months later when RSI < 30.

This recently occurred in October and November.

The 3-month forward returns from the latest occasions remain to be seen, but so far it has found a bounce on a 1-month forward basis.