"Finding some stocks that are a bit down to double up on can be a good investing strategy. However, investors must be sure that what they're buying is a quality company that's only down because the market has grown impatient or is expecting some short-term headwinds. If you can identify these companies, I think there is a lot of money to be made by purchasing shares today."
"Meta Platforms is better known for the social media companies underneath its umbrella, like Facebook and Instagram. The primary revenue driver on these platforms is advertising, which is a high-margin business for Meta. Meta is also heavily investing in artificial intelligence (AI) to improve ad performance on its platforms, and it's already seeing some of those benefits come about. During Q3, revenue rose 26% year over year. With nearly all of its revenue coming from advertising-related sources, this showcases how strong this business is."
"However, the market is more concerned about what Meta is going to do with all of the cash it's generating. During 2024, Meta spent about $39 billion on capital expenditures. For 2025, it estimates that it will spend $70 billion to $72 billion on capital expenditures, with nearly all of that money going toward AI data centers. Management stated that the dollar growth in capital expenditures will be "notably larger" in 2026."
Buying stocks that are moderately down can yield strong returns when those companies remain fundamentally solid and are temporarily discounted. Meta Platforms derives nearly all revenue from high-margin advertising and is deploying AI to enhance ad performance, supporting a 26% year-over-year revenue increase in Q3. Meta's capital expenditures rose to about $39 billion in 2024 and are projected at $70–72 billion for 2025, largely for AI data centers, with management signaling "notably larger" dollar growth in 2026. Those financing needs have unsettled the market and weighed on the stock. MercadoLibre also trades below its high and offers a discounted entry opportunity.
Read at The Motley Fool
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