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Welcome back everyone. 
In this video, we're going to be

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talking about meta. 
I know there's so many opinions 

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about this company, so many 
thoughts and Analysis already on

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it. 
So I'm hoping to share something

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unique in this video. 
I'm hoping that you walk away 

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from it. 
Having a different perspective 

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on meta. 
Now, even though there's lots of

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different opinions on this 
company, the stock has been 

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devastated this year, it's down,
74 percent year-to-date and it 

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still has downward momentum. 
It's still going down day after 

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day today, it's down half 
percent last. 

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Five days is down, 10%. 
Past months, down 34%, past six 

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months is down 57%, past year, 
it's down 72%. 

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The stock doesn't seem to have a
bottom. 

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Meanwhile, this company has 
seemingly fooled. 

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Even the brightest investors of 
the bunch, the so-called super 

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investors, the ones managing 
hundreds of millions of dollars 

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in excess to billions of 
dollars, had their top holding, 

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the very top holding amongst, 
all of them was meta it showed 

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up in more portfolios of super 
investors earlier this year than

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any other company. 
But for the super As well as 

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many other investors like you 
and me Mehta has been more of a 

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value trap than a value play. 
The company has been disastrous 

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and it's left investors thinking
what do we do now? 

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Now, I think before we jump into
today's situation with meta, I 

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think it would be good to take a
step back and realize what this 

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company has gone through meta IP
owed back in 2012 as Facebook, 

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it was just Facebook The Social 
Network and it was ran by 

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Zuckerberg, who had his goofy 
haircut at the time. 

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He was this young kid a child 
genius type of Kid and he owned 

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the majority of the company. 
He owned all of it. 

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This made investors a little bit
nervous. 

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A young kid owning the majority 
of this big company. 

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This IP owing and it's a social 
media Network which weren't 

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really popular at the time. 
There was my space is the most 

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recent memory. 
So investors were reasonably 

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concerned after the meta IPO and
the stock showed that for the 

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first year, the stock basically 
traded flat, it was around 

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twenty dollars per share at that
period in time then Mark 

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Zuckerberg did something. 
Special. 

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He did something unexpected. 
He took Facebook his company and

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made boatloads of money. 
We're talking about some money 

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that investors couldn't even 
conceive of Facebook turned into

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a cash generating machine. 
And then on top of that he made 

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these Acquisitions 2012 he 
bought Instagram for a billion 

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dollars and turned it into 
another explosive. 

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High-growth billion-plus user 
cash, generating machine. 

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He bought WhatsApp and grew that
one to have billions of users as

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well. 
Mark Zuckerberg was firing on 

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all cylinders doing acquisition,
after acquisition growing, 

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massive company after massive 
company. 

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The quarterly growth was like 
clockwork more user growth, 

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every single quarter more 
profits for shareholders. 

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And throughout this time period,
the stock price reflected it 

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investors trusted in Mark. 
He was the one that they could 

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go to to make them boatloads of 
money. 

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And you can look at the stock 
returns over this time period 

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from 2012 to 2017. 
It's basically a straight line 

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up and to the right, you could 
Release money on Facebook. 

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It was a sure thing and the cash
flows, resembled the same Trend,

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going up incrementally quarter 
after quarter, Facebook was a 

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cash generative machine. 
Now, keep in mind during this 

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time period, Mark Zuckerberg 
owned the majority of Facebook, 

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not in total share count. 
So he didn't have the majority 

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of equity, but in voting rights.
See, he was smart. 

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He wanted to have complete 
control over the company. 

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So even though he sold off the 
majority of it, he kept these 

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shares at have much more voting 
rights than a Normal. 

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Share, that gave him total 
control of the company. 

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He runs it with complete 
autonomy. 

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He's beholden to nobody else. 
All the directors and other 

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shareholders that are supposed 
to keep the executive in check. 

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Well, they're basically novelty 
pieces. 

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They're just there for show. 
They can't do anything. 

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Even if they tried zakhar Berg 
runs the show. 

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And so far, the show was 
phenomenal, investors couldn't 

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complain Mark. 
Zuckerberg had led this in such 

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a good direction. 
For such a long time period, 

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he's exceeded their 
expectations. 

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Patience to such an extent that 
investors push that entire 

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concern of ownership of the 
company of voting rights to the 

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sidelines. 
They forgot about it completely 

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at this point. 
Now, of course, during this 

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period of time, he didn't only 
make other shareholders wealthy,

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he made himself wealthy. 
He was a biggest shareholder of 

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the company. 
His wealth reached a point of 

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being above, 50 billion dollars.
Zuckerberg was one of the 

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wealthiest people in the world. 
And at that point, he basically 

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has accomplished the wealth 
came. 

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He doesn't care about it 
anymore. 

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He has enough money to last him.
A Under lifetimes and 

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Zuckerberg, 's Ambitions change.
We see something happen over 

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this time period. 
It becomes clearer and clearer. 

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That Zuckerberg is no friend 
with apple. 

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In fact, they're basically 
enemies. 

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They hate each other. 
They hate each other's guts, Tim

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Cook and Mark Zuckerberg, do not
like each other one bit. 

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This is obviously clear, because
Mark Zuckerberg has created this

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amazing platform where he has 
complete control. 

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He has massive amounts of 
wealth. 

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He's been buying different 
companies, he's not beholden to 

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anyone else. 
No director. 

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No other shareholder, but is 
beholden to one company. 

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One guy, Tim Cook. 
Tim Cook can exercise control 

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over Zuckerberg because Tim Cook
controls the iPhone the platform

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of distribution to billions of 
people that Zuckerberg has to 

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work through and this leads to 
some challenges. 

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It's not only clear that 
Zuckerberg doesn't like Tim 

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Cook. 
It's clear that Tim Cook does 

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not like Zuckerberg and he 
doesn't like Facebook. 

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He's mentioned many times that 
he thinks it's not healthy. 

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It's not good for users. 
It's not good to have. 

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Endless scrolling now Tim Cook 
being no friend of Mark 

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Zuckerberg and no friend of 
Facebook devised a way to harm 

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Facebook to hurt them. 
A lot to hurt their entire 

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business model and everything 
they've built. 

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It's called a TT app, tracking 
transparency and the best part 

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is Tim Cook. 
Did this under the guise and 

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under the premise of privacy, 
they're allowing users more 

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privacy. 
While simultaneously hurting 

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Facebook's business model, 
they're basically hitting two 

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birds with one stone. 
So to speak the APT Can 

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transparency has caused tens of 
billions of dollars to 

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Facebook's bottom line, it's 
hurt the ability for advertisers

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to track what's going on and how
effective their ads are the 

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entire premise of Facebook's 
business and they're currently 

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trying to recover from this hit 
and Mark Zuckerberg. 

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Right there. 
Saw that with this one little 

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change app, tracking 
transparency, Apple exercise 

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control over him and his company
heard his bottom line heard as 

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market cap of his company 
damage, their ability to run 

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their business, how they see 
fit. 

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And Zuckerberg doesn't like 
that. 

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Remember he likes having control
over everything that's why he 

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owns majority of voting shares 
in his company. 

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So what does Zuckerberg do, does
he just submit to Apple? 

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Does he give up no Zuckerberg 
doesn't? 

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Because remember this guy's a 
fighter. 

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He literally fights in his free 
time. 

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He's training to do that right 
now. 

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He's not going to give up and 
let Apple take advantage of meta

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forever. 
That's not something he wants to

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do. 
He's trying to come up with a 

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way to get around Apple to 
circumvent them, to become the 

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Platform see, Mark Zuckerberg 
has realized how important it is

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to control the hardware if he 
could control the hardware and 

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the platform that people operate
on top of the software, then he 

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won't have to be beholden to 
anyone. 

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No apple, no Android. 
He's the one in total control 

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and that's where the meta verse 
comes into play. 

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Now, there's a lot of hints 
about the metaverse. 

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It started off with 2019 with 
Facebook. 

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Making Road plans about virtual 
reality, that's what it was 

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before the Maneuvers and then 
over time, virtual reality 

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evolved into something bigger. 
Or the entire VR ecosystem, 

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which is now called the 
metaverse. 

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A lot of people assumed that 
when Facebook announced they're 

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changing their name to Metta 
that it was because of the brand

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tax that Facebook was just a 
tarnished brand from regulators.

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And is basically a PR thing that
was the Assumption incorrectly, 

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that many investors made, the 
reason I knew that wasn't the 

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primary reason they changed the 
name to the metaverse was 

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because I listened to one of the
earnings call and I was able to 

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hear first-hand mark. 
Talk about the metaverse. 

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He was excited about it. 
He was not only excited he was 

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infatuated with it. 
It was the only thing on his 

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mind, he didn't really care so 
much about the core business of 

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Facebook or Instagram or 
Whatsapp or whatever is going 

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on. 
He had other people to manage 

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that stuff that was old news. 
Now stuff that he managed for 

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the past 10 years. 
He was done with that and he was

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focused on something new, the 
metaverse. 

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And this is where I began to get
really worried about this 

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investment. 
I thought that this might be a 

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situation where investors have 
No clue what they're really 

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invested in the CEO of this 
company who has total control of

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it. 
All the voting rights has 

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changed his Direction entirely 
from the existing Legacy 

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businesses into. 
Just a meta verse company that 

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was the sole focus of it. 
And I came out with this video, 

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this one right here, one year 
ago, October of 2021. 

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The video title was be where 
investors I said investors and 

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Facebook beware warning, I have 
some news that I think is true. 

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About this company. 
I want to go ahead and play the 

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very beginning of this video. 
And again, this was October of 

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2021. 
When I made this video and meta 

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was trading at 280 dollars a 
share, it's currently at 88, you

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know, I wish the title of this 
video was clickbait. 

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I really do. 
I wish. 

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I click baited you in and it 
really wasn't that big of a 

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warning but unfortunately this 
really is accurate. 

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There needs to be a warning to 
Facebook investors and that is 

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that I think, frankly I think a 
lot of Facebook investors don't 

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really know what Investing in 
right now and to some extent. 

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I didn't either until I listen 
to the Facebook earnings call, 

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and it became abundantly clear 
that I'm no longer just invested

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in a social media company and 
Instagram and Facebook and a 

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Marketplace in a growing, a 
growing Network. 

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What I'm investing in is Mark 
Zuckerberg, dream of the 

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metaverse. 
That's what a lot of my money is

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going towards, and to put it in 
perspective, this is not a side 

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project for Zuckerberg. 
This isn't some like Little 

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thing that he's doing that he's 
having fun with. 

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This is his entire Focus, you 
can listen to the enthusiasm on 

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the call. 
When he talks about the 

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metaverse, you can listen to 
where his priority and focus and

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even the financial focus of the 
company has all the resources. 

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Everything's going into the 
metaverse, this is what he's 

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focused on and Facebook 
investors. 

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I don't think have really come 
to terms with this. 

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You're no longer just invested 
in this social media company. 

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You're invested in Mark 
Zuckerberg vision of the 

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metaverse. 
And some of you I don't Don't 

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even think know what that is. 
What is his vision of the 

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metaverse? 
What even is the metaverse to 

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begin with? 
Those are questions. 

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A lot of people have now after I
raise the red flag last year 

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about Mark Zuckerberg Ambitions 
with the metaverse. 

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What do we have play out? 
Well, investors cried foul. 

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They said Mark, we don't like 
that. 

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You're spending so much money on
the metaverse, ten billion 

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dollars seems a little bit. 
Excessive. 

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What did Mark Zuckerberg do? 
Did he go? 

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Okay, shareholders, I'm sorry 
that you have this concern. 

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We're going to rein it in a 
little bit. 

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We're going to pull back. 
No he didn't. 

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Increased capex. 
He spent more, he dedicated more

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assets to the metaverse 
investors. 

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Screamed more foul selling out 
of the company. 

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00:11:08,400 --> 00:11:10,300
Doing the one thing they can 
really do. 

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The stock price is dropping 20 
30 percent and what is Mark 

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Zuckerberg do? 
Does he change gears and say 

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that his focus is now away from 
the metaverse and he's going to 

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focus on things with more 
predictable return on 

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00:11:21,400 --> 00:11:24,600
investment? 
No, he triples down on the 

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metaverse, doesn't care what 
other shareholders are saying 

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doesn't care about his net worth
dropping. 

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Take care about the directors, 
doesn't care about anything else

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00:11:32,700 --> 00:11:36,400
other than the metaverse. 
And this trend continues on the 

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00:11:36,400 --> 00:11:41,100
stock price is down 75%. 
It's been completely devastated.

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00:11:41,100 --> 00:11:44,600
Morale at Facebook is 
devastated. 

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00:11:44,600 --> 00:11:47,700
Employees are unsure of their 
future, their, they don't know 

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00:11:47,708 --> 00:11:50,500
what's going on with their stock
based compensation and their 

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00:11:50,500 --> 00:11:53,400
entire employment. 
And what is Mark Zuckerberg to 

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he quadruples down on the 
metaverse? 

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00:11:55,800 --> 00:11:59,200
And he says that is going to be 
the primary goal either get on 

247
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board. 
Or get off the train, get on 

248
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board with what I'm doing as 
CEO, and sole control of this 

249
00:12:05,400 --> 00:12:08,200
company, or go away, take a 
hike. 

250
00:12:08,400 --> 00:12:09,800
That's what Zuckerberg is 
messages. 

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00:12:09,900 --> 00:12:12,600
And in those two choices, 
obviously, many investors have 

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00:12:12,600 --> 00:12:15,900
chosen to take a hike, they've 
left and that's why the stock is

253
00:12:15,900 --> 00:12:18,200
down 75%. 
Now, where does that leave us 

254
00:12:18,200 --> 00:12:20,500
now? 
We have a situation with meta 

255
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where the company is optically, 
cheap by just first glance. 

256
00:12:24,400 --> 00:12:27,800
It's trading at like a nine to 
ten forward P/E ratio that's 

257
00:12:27,800 --> 00:12:32,000
typically considered cheap as 
the Entire S&P. 500, is that a 

258
00:12:32,100 --> 00:12:36,200
17-4 PE ratio so metas at a low 
P/E ratio. 

259
00:12:36,400 --> 00:12:39,000
But that doesn't automatically 
mean the company's cheap. 

260
00:12:39,000 --> 00:12:41,800
And in the situation, I don't 
think the company's cheap 

261
00:12:41,800 --> 00:12:43,500
actually don't think it's that 
cheap. 

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Even given the low P/E ratio. 
Now, if you're thinking Joseph, 

263
00:12:47,000 --> 00:12:50,000
how's this company not cheap 
when it's trading at a ten 

264
00:12:50,000 --> 00:12:52,300
forward, P/E ratio, a very low 
P/E ratio. 

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Let me give you the full context
of the current situation. 

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We have a CEO, Mark, Zuckerberg 
that owns 13.5% Company. 

267
00:13:00,400 --> 00:13:03,500
So you owns a little over 10% of
the actual shares of the 

268
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company, but he has the voting 
power of 58 percent. 

269
00:13:07,100 --> 00:13:10,900
So even though he owns a 
minority stake a little over 10%

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00:13:10,900 --> 00:13:13,700
he controls the entire Destiny 
with no retribution. 

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00:13:13,900 --> 00:13:16,100
No feedback doesn't care about 
anything else. 

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He's in total control. 
Now, this person Zuckerberg, the

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00:13:20,100 --> 00:13:22,900
individual controlling the 
destiny doesn't seem to be 

274
00:13:22,900 --> 00:13:26,400
concerned about Roi. 
It's not his primary Endeavor 

275
00:13:26,400 --> 00:13:29,100
right now is to get returns. 
He's already wealthy. 

276
00:13:29,100 --> 00:13:32,100
Remember he's Already even at a 
minimum even after this dramatic

277
00:13:32,100 --> 00:13:34,600
drop worth tens of billions of 
dollars. 

278
00:13:34,800 --> 00:13:39,500
Some money's not a concern for 
him and this CEO that has total 

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00:13:39,500 --> 00:13:42,000
autonomy can do whatever he 
wants with. 

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00:13:42,000 --> 00:13:46,400
No retribution whatsoever is 
engaging in value destructive 

281
00:13:46,400 --> 00:13:49,100
Capital allocation. 
He's throwing money into 

282
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projects that are a furnace for 
money pouring tens of billions 

283
00:13:53,800 --> 00:13:57,300
of dollars into something that's
giving incredibly low returns. 

284
00:13:57,500 --> 00:13:59,600
Even the forward expected 
returns. 

285
00:13:59,800 --> 00:14:02,800
This metaverse project are 
incredibly low and at the same 

286
00:14:02,800 --> 00:14:06,200
time, you have the CEO engaging 
in this value destructive act of

287
00:14:06,200 --> 00:14:09,500
putting money into something 
with no foreseeable Roi. 

288
00:14:09,800 --> 00:14:13,100
You have other problems as well.
Tick Tock is a problem. 

289
00:14:13,300 --> 00:14:16,300
YouTube shorts is a problem for 
meta, they faced intense 

290
00:14:16,300 --> 00:14:19,000
competition and basically 
everything that they're doing 

291
00:14:19,300 --> 00:14:21,700
their core, businesses are 
holding up, okay, in the face of

292
00:14:21,708 --> 00:14:23,700
competition. 
But then you also have the 

293
00:14:23,700 --> 00:14:27,500
problem of apple and app, 
tracking transparency, that 

294
00:14:27,500 --> 00:14:32,300
alone is lowering the margins of
Metas of Facebook's income. 

295
00:14:32,400 --> 00:14:35,200
It's lowering their ad margins. 
So they're having to deal with 

296
00:14:35,200 --> 00:14:38,000
that threat as well. 
They have multiple challenges on

297
00:14:38,000 --> 00:14:40,800
multiple fronts and then worst 
of all any profits. 

298
00:14:40,800 --> 00:14:43,500
The actual core businesses 
generate get filtered in the 

299
00:14:43,500 --> 00:14:47,400
more capex for the metaverse. 
So the reward that we get from 

300
00:14:47,400 --> 00:14:50,900
the profitable businesses is 
being filtered and funneled into

301
00:14:50,900 --> 00:14:54,900
something where we have no 
foreseeable Roi and you have no 

302
00:14:54,900 --> 00:14:58,500
say in what goes on, there's no 
recourse for the actions of the 

303
00:14:58,500 --> 00:15:00,100
CEO. 
So in my opinion, You know, when

304
00:15:00,100 --> 00:15:04,700
I look at meta right now and I 
see it trading at a 12 for PE 

305
00:15:04,700 --> 00:15:09,400
ratio at 9:40 PE ratio that 
implies that investors are now 

306
00:15:09,400 --> 00:15:13,300
pricing in that the company is 
not generating value for the 

307
00:15:13,300 --> 00:15:15,000
investor. 
They're not going to generate 

308
00:15:15,000 --> 00:15:18,500
wealth for the investor that 
implies that this company is 

309
00:15:18,500 --> 00:15:20,600
actually doing things that is 
value destructive. 

310
00:15:20,600 --> 00:15:23,300
I have something that I've used 
frequently for my investments 

311
00:15:23,300 --> 00:15:25,900
called the evaluation framework.
This is two different ways of 

312
00:15:25,908 --> 00:15:29,000
valuing a company that I look at
for all my different Holdings. 

313
00:15:29,200 --> 00:15:31,800
One of Um, is based off the 
price to earnings ratio, plus 

314
00:15:31,800 --> 00:15:35,600
the ROC e, the Returns on 
Capital to companies getting and

315
00:15:35,600 --> 00:15:38,300
the other ones based on the free
cash flow and the free cash flow

316
00:15:38,300 --> 00:15:40,100
growth. 
So we have two different ways to

317
00:15:40,100 --> 00:15:42,200
value a company. 
Let's go ahead and just look at 

318
00:15:42,200 --> 00:15:44,600
meta as an example here. 
And you can see where I'm coming

319
00:15:44,600 --> 00:15:47,600
from, where I don't think the 
company so mispriced right now. 

320
00:15:47,600 --> 00:15:50,400
The first way that we can value 
the company is based on the P, 

321
00:15:50,400 --> 00:15:53,400
e+ the earnings growth and our 
oce. 

322
00:15:53,400 --> 00:15:56,100
So let's go ahead and just check
out these different metrics on 

323
00:15:56,100 --> 00:15:58,000
meta. 
We have a company where the 

324
00:15:58,000 --> 00:16:03,200
earnings growth is To move - the
pasture was down 49 percent the 

325
00:16:03,200 --> 00:16:05,700
past two years. 
It has a compound annual growth 

326
00:16:05,700 --> 00:16:10,000
rate of - 22 %. 
You can see the obvious horrible

327
00:16:10,000 --> 00:16:12,100
Trend here with the Ernie's 
going down. 

328
00:16:12,100 --> 00:16:15,800
Substantially this is a 
consequence of Apple exercising,

329
00:16:15,800 --> 00:16:19,600
their control with ATT the app 
tracking transparency that has 

330
00:16:19,600 --> 00:16:21,700
lowered the margins for 
Facebook's ads. 

331
00:16:21,800 --> 00:16:24,200
We don't even know if they can 
ever recover the margins For 

332
00:16:24,200 --> 00:16:27,100
Those ads. 
So, the earnings growth seems to

333
00:16:27,100 --> 00:16:30,800
not only be flat but it's 
actually declining over time. 

334
00:16:30,900 --> 00:16:34,300
The earnings are all the way 
back to where they were in 2017.

335
00:16:34,700 --> 00:16:38,000
So the earnings growth right 
now, the visibility doesn't look

336
00:16:38,000 --> 00:16:40,300
great. 
Now you can assume some earnings

337
00:16:40,300 --> 00:16:43,100
growth even if we make an 
assumption that they're going to

338
00:16:43,100 --> 00:16:46,800
grow earnings 10 or 15% year 
after year from here, which I 

339
00:16:46,800 --> 00:16:48,400
think is a very risky. 
Assumption. 

340
00:16:48,400 --> 00:16:51,000
Let's say that they grow 
earnings at 10% from here on 

341
00:16:51,000 --> 00:16:52,700
out. 
The next thing that we look at 

342
00:16:52,700 --> 00:16:55,100
with the earnings growth is the 
ROC e. 

343
00:16:55,100 --> 00:16:58,100
The returns a company's getting 
on its new Investments. 

344
00:16:58,400 --> 00:17:02,300
Now, this has been a bright Spot
for meta for Facebook over the 

345
00:17:02,300 --> 00:17:04,599
past, decade the things that 
they've invested in, they've 

346
00:17:04,599 --> 00:17:06,500
gotten really good. 
Returns, they invested in 

347
00:17:06,500 --> 00:17:09,000
Instagram, they got really good 
returns investing in their Core.

348
00:17:09,000 --> 00:17:12,300
Business was very profitable, 
the returns in 2021, we're 

349
00:17:12,300 --> 00:17:17,400
actually really good 32%, that's
high, Roc e, but this is based 

350
00:17:17,400 --> 00:17:19,800
off of things. 
They've done in the past, their 

351
00:17:19,800 --> 00:17:23,400
core businesses, Instagram 
WhatsApp Facebook. 

352
00:17:23,400 --> 00:17:26,800
Those core Investments have led 
to very high are oce. 

353
00:17:27,099 --> 00:17:29,300
The question is, what is this 
going to look like over the 

354
00:17:29,300 --> 00:17:31,500
next? 
Next, five years and right now 

355
00:17:31,500 --> 00:17:35,100
the trend is going down 
metaverse Investments are not 

356
00:17:35,100 --> 00:17:37,400
having as good of a return as 
investments in their Core 

357
00:17:37,400 --> 00:17:39,800
Business. 
We can even see the similar 

358
00:17:39,800 --> 00:17:42,600
precipitous decline quarter 
after quarter all the way back 

359
00:17:42,600 --> 00:17:44,900
in 2020. 
Ever since Zuckerberg started to

360
00:17:44,900 --> 00:17:48,100
spend money on the metaverse. 
The ROC is in Decline. 

361
00:17:48,100 --> 00:17:50,600
So when you look at the first 
way, valuing a company based on 

362
00:17:50,600 --> 00:17:55,300
the Roc and earnings growth, the
problem is that we have no 

363
00:17:55,300 --> 00:17:59,500
confidence in this company that 
it will have above an 8% are oh,

364
00:17:59,700 --> 00:18:02,100
Cee. 
And if it doesn't have above an 

365
00:18:02,100 --> 00:18:05,500
8% return on its capital 
employed, the company should 

366
00:18:05,500 --> 00:18:09,000
trade at a lower multiple a 
commodity, multiple should trade

367
00:18:09,000 --> 00:18:12,100
around 10 to 12. 
So, based off this first way of 

368
00:18:12,100 --> 00:18:14,600
valuing meta. 
The companies, probably fair 

369
00:18:14,600 --> 00:18:16,100
value. 
It's probably right where it's 

370
00:18:16,100 --> 00:18:17,800
supposed to be. 
The only thing that would really

371
00:18:17,800 --> 00:18:21,400
change, this is if you believe 
the are osce, the returns from 

372
00:18:21,400 --> 00:18:25,200
the metaverse are going to be 
far above 8% and my opinion. 

373
00:18:25,200 --> 00:18:27,800
I think that's highly unlikely. 
I think it's incredibly 

374
00:18:27,800 --> 00:18:29,400
unpredictable, I view it as a 
long. 

375
00:18:29,600 --> 00:18:31,700
Shot and I think it should be 
priced appropriately. 

376
00:18:31,700 --> 00:18:34,200
So that is exactly what 
investors are doing hair. 

377
00:18:34,300 --> 00:18:37,600
The next way that we can value. 
This is based on the free cash 

378
00:18:37,600 --> 00:18:39,800
flow and the free cash flow 
growth. 

379
00:18:40,000 --> 00:18:42,300
So you basically, look at the 
free cash flow yield plus the 

380
00:18:42,300 --> 00:18:45,700
free cash flow growth and you 
evaluate based on a discount 

381
00:18:45,700 --> 00:18:47,100
rate, that's above what you 
think. 

382
00:18:47,100 --> 00:18:49,900
The 10-year treasury will be, 
this is another very simple 

383
00:18:49,900 --> 00:18:52,100
straightforward way to value a 
company not first glance. 

384
00:18:52,100 --> 00:18:54,600
When we bring up meta, the free 
cash flow yield looks a lot 

385
00:18:54,600 --> 00:18:57,800
better. 
This is a really high yield 11%.

386
00:18:58,200 --> 00:19:00,900
Now, the thing that you have to 
assume With the free cash flow 

387
00:19:00,900 --> 00:19:04,500
yield is that it will maintain 
and grow over time from the 

388
00:19:04,500 --> 00:19:07,400
level that it's currently at. 
That is a very important 

389
00:19:07,400 --> 00:19:09,800
assumption. 
The free cash flow yield is 

390
00:19:09,800 --> 00:19:12,300
backwards looking. 
It's based on the trailing 12 

391
00:19:12,300 --> 00:19:15,800
months, not the forward view. 
What has been happening over 

392
00:19:15,800 --> 00:19:18,100
time? 
Well this is the free cash flow 

393
00:19:18,400 --> 00:19:21,700
of meta over time. 
We can see the entire history of

394
00:19:21,700 --> 00:19:23,900
the company. 
Again it was doing really good 

395
00:19:23,900 --> 00:19:27,000
during those early years growing
free cash flows on a steady rate

396
00:19:27,300 --> 00:19:29,400
and then what happened over the 
past couple of core. 

397
00:19:29,600 --> 00:19:33,500
Ders, it has completely 
evaporated their free cash flow 

398
00:19:33,500 --> 00:19:37,000
is completely gone. 
Last quarter was point three 

399
00:19:37,000 --> 00:19:40,200
billion dollars, 300 million. 
This is one of the lowest free 

400
00:19:40,200 --> 00:19:42,700
cash flow quarters ever in Mets 
history. 

401
00:19:42,800 --> 00:19:46,100
In fact, qual term shows this as
a 96 percent decline year over 

402
00:19:46,100 --> 00:19:47,900
year. 
So the free cash flow has 

403
00:19:47,900 --> 00:19:49,900
plummeted. 
Well, what happened to the free 

404
00:19:49,900 --> 00:19:51,900
cash flow. 
Why is it just evaporating? 

405
00:19:52,200 --> 00:19:53,900
We can look at a couple 
different things here. 

406
00:19:54,200 --> 00:19:57,800
The capex, spend of the company 
has likewise exploded and 

407
00:19:57,800 --> 00:20:02,000
remember the calculation Free 
cash flow is amount of operating

408
00:20:02,000 --> 00:20:05,000
income from the company - the 
capital expenditures. 

409
00:20:05,200 --> 00:20:07,200
That's how you calculate free 
cash flow. 

410
00:20:07,400 --> 00:20:11,600
When you see capex double in a 
six-month period, That's 

411
00:20:11,600 --> 00:20:15,600
alarming the capex. 
Just six months ago was 5.4 

412
00:20:15,600 --> 00:20:17,900
billion dollars. 
Now it's gone to nine point 

413
00:20:17,900 --> 00:20:20,700
three eight billion dollars and 
this is only one of the expenses

414
00:20:20,700 --> 00:20:22,900
of the company. 
All the other expenses have been

415
00:20:22,900 --> 00:20:25,700
going up as well. 
This company has been ballooning

416
00:20:25,700 --> 00:20:29,300
in expenses and capex and 
general and administrative 

417
00:20:29,300 --> 00:20:30,900
costs. 
It's as the revenues have 

418
00:20:30,900 --> 00:20:33,400
flattened. 
The profitability has declined, 

419
00:20:33,500 --> 00:20:35,900
the margins have declined and 
the free cash flow has 

420
00:20:35,900 --> 00:20:38,100
evaporated. 
So we look at valuation method. 

421
00:20:38,100 --> 00:20:40,100
Number two, we need to assume 
that. 

422
00:20:40,100 --> 00:20:42,600
The company's free cash flow 
yield is not only stable but 

423
00:20:42,600 --> 00:20:45,900
it's going to grow on a 
continual rate, 10% or more year

424
00:20:45,900 --> 00:20:47,300
of year. 
That's how we get a good 

425
00:20:47,300 --> 00:20:49,900
investment to has a high current
yield and it's going to grow its

426
00:20:49,900 --> 00:20:52,800
free cash flow over time. 
Can we safely make those 

427
00:20:52,800 --> 00:20:54,800
assumptions with a company like 
meta? 

428
00:20:55,500 --> 00:20:59,100
I don't know, maybe it will. 
Maybe Mark Zuckerberg will turn 

429
00:20:59,100 --> 00:21:01,800
it around. 
Again, he's the sole owner, he 

430
00:21:01,800 --> 00:21:03,900
controls all of this. 
He could make the company worth 

431
00:21:03,900 --> 00:21:06,100
a lot more by a Banning the 
metaverse plans. 

432
00:21:06,300 --> 00:21:08,700
Or by having those plans that 
long shot. 

433
00:21:08,700 --> 00:21:12,500
Be wildly successful and beating
everyone's expectations again, 

434
00:21:12,800 --> 00:21:16,100
but again, if you look at this, 
either way, based off the risks 

435
00:21:16,100 --> 00:21:20,100
in the stock right now based off
the expected Roi of the 

436
00:21:20,100 --> 00:21:22,400
metaverse. 
It looks appropriately. 

437
00:21:22,400 --> 00:21:24,900
Valued doesn't look 
substantially cheap. 

438
00:21:24,900 --> 00:21:28,100
Doesn't look too expensive. 
It just looks in the range in my

439
00:21:28,100 --> 00:21:31,600
opinion of being Where it 
deserves to be the things that 

440
00:21:31,600 --> 00:21:34,700
could change it and if you're 
metaverse investor I think the 

441
00:21:34,700 --> 00:21:38,300
things that you'll want to see 
is either a good Roi on 

442
00:21:38,300 --> 00:21:41,000
metaverse pain. 
Seeing actual Revenue growth 

443
00:21:41,000 --> 00:21:43,900
from it and profitability from 
it or seeing Mark Zuckerberg 

444
00:21:43,900 --> 00:21:47,000
back off a little bit from those
plans dedicate a little bit more

445
00:21:47,000 --> 00:21:49,800
time and effort to your core 
businesses and all the problems 

446
00:21:49,800 --> 00:21:52,800
they're facing because right now
Zuckerberg is not doing that. 

447
00:21:52,800 --> 00:21:55,600
He has alienated Wall Street, 
they want nothing to do with 

448
00:21:55,600 --> 00:21:58,200
him, all the confidence that 
he's built up over the past 10 

449
00:21:58,200 --> 00:22:00,800
years of running. 
These Businesses has been 

450
00:22:00,800 --> 00:22:03,700
completely lost, so there's my 
breakdown. 

451
00:22:03,800 --> 00:22:06,300
This is a tough one. 
I'm not saying this is an easy 

452
00:22:06,300 --> 00:22:09,300
investment but that's my take 
right now for me. 

453
00:22:09,400 --> 00:22:11,600
This one is just going to stick 
on the sidelines. 

454
00:22:11,600 --> 00:22:14,700
I'm going to wait it out and get
more clear direction from what 

455
00:22:14,700 --> 00:22:17,300
the CEOs doing, what the 
direction of the company is. 

456
00:22:17,300 --> 00:22:19,600
So, I hope you enjoyed this 
little video. 

457
00:22:19,600 --> 00:22:22,200
This overview if you like this 
type of content, check out the 

458
00:22:22,200 --> 00:22:23,200
patreon. 
There's a link in the 

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00:22:23,208 --> 00:22:24,700
description. 
We have lots of exclusive 

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episodes and you get access to 
Quantum as well see in the next 

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00:22:28,100 --> 00:22:28,400
one.