Needham Reiterates Hold on Meta
Needham analyst Laura Martin reiterated a Hold rating on Meta Platforms Inc. (NASDAQ: META).
“We retain our HOLD, because we believe that META’s strategy diffusion destroys economic value.
We think META is asking for too much capital for too many projects, and since competition is intense, strategy dilution lowers the odds that it will succeed at any of them.
For example, in addition to CapX for GenAI, Meta is asking public markets to fund several other money losing businesses with unclear ROICs, (eg, LLAMA, Quest, Orion, Ray-Ban Glasses, Metaverse, Reality Labs, etc.).
Each of these businesses is a net user of capital with growing expenses, so META should choose the highest ROIC activities to focus on, and shut down the others, we argue.
We believe META’s strategy diffusion wastes shareholder capital.”
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