Source Post

Drew Cohen Called Meta at $130. Only One Thing Mattered.

The creator breaks down how to analyze Meta's business model by focusing on four key variables: users, time spent, ad load, and ad pricing. They explain that despite numerous external pressures like TikTok competition, regulatory scrutiny, and metaverse investments, the primary concern for Meta at the time was ad pricing, largely due to Apple's App Tracking Transparency (ATT). The creator highlights how Meta's introduction of Advantage Plus and CAPI demonstrated a solution to the signal loss issue, making the low revenue growth priced into the stock at $130 a low-risk bet. The analysis is then compared to the current market sentiment around software companies, suggesting a similar pattern of fear and potential mispricing. The creator uses an analogy of a picture to explain how investors should focus their research efforts on the most critical questions for a company. For Adobe, the key question is the stickiness of its enterprise marketing software and user adoption of AI features, rather than the threat from AI startups.