Meta: Turning Volatility Into Options Opportunities

During one of their recent episodes of the Value Options Letter and Acquirers Podcast, Travis and Tobias discussed Meta: Turning Volatility Into Options Opportunities. Here’s an excerpt from the episode:

[Tobias] Uncertainty is something that you can take advantage of in the market. And I think Meta is a particularly interesting case study because when Zuck was aiming for the Metaverse, when he had the name change and they started spending enormous amounts of money trying to create the Metaverse and investors got similarly scared at that time and Meta sold off pretty rapidly, it showed that it was a little bit discretionary because Zuck at some point decided that he didn’t want to spend as much money on the Metaverse. They’ve largely written that off. And instead he redirected that money to share buybacks for a period of time.

Now we’re back into a scenario where that money is being spent on AI. Some of it’s discretionary. It’s uncertain what’s going to happen.

We don’t know what the usage really is going to look like at scale. Clearly there’s huge demand. Clearly spending enormous amounts on CapEx is probably going to generate pretty good ROI, but it’s not going to be clear for a long time how they balance the CapEx spend against the return on investment that they’re hoping to make.

And so with that little bit of volatility, it’s possible to create some opportunities for entry into something like Meta.