Yahoo Finance

So, let's get some more perspective here. Rohit Kulkarni is joining us now. Roth MKM managing director. Rohit, let's just start first blush reaction to the numbers that you're seeing.

Hey, thanks for having me. I think, uh, meta was pretty controversial heading into print, uh, today, given what we heard from, uh, a couple of other companies like Google, as well as, uh, Pinterest yesterday. I think meta was increasingly controversial. I think, uh, 2Q is less of a surprise based on what, uh, what the expectations were, but the big surprise here is, uh, is twofold. One is 3Q guide. Year-on-year comps are pretty tough for meta for 3Q, and the guide that they have implies 20% growth on top of a very tough comp. That is one of the most bullish signals that the company is sending, as well as all the things they are doing about AI and various different things. Cap, capex and operating expenses, we shall see. I think that weighs down on the stock, but overall, I think 3.5 or five stars for meta, particularly given what we were hoping or fearing coming into the print.

Do you think they could have gotten away with more capex? I mean, where do you think they lie within the realm of possibilities here?

Uh, again, significant growth in capex, it remains to be seen. Again, uh, meta is probably on a run rate basis on like 45 billion dollar capex by end of this year. So that's a very big honking number for this company and, uh, and that what happens to the return on that, uh, capex and over what period, that is the biggest question mark, and that probably weighs on the stock over the near term. So we are from here into the year end, probably we are in this kind of, uh, up 10, down five, up 10, down five zone for, uh, meta because the velocity with which they are spending is continues to go up.

You know, and I want to, you know, there's the, the future, the spending that they're doing for the future business, right, for to really focus on AI, but in the meantime, they have an ad business, right? So let's talk about that for a second here because they said ad impressions across their family of apps were up 10%, average price per ad up 10%. Um, how does that comport with what you expected from the company and what we should expect from them going forward given their size?

Yeah, I think, uh, the, the moment a company like meta, uh, which has essentially an auction-based model, uh, for pricing their ads, the moment they start to see pricing go up, that essentially is, is a way for us to read that this company is putting the right ad in the front of the right person at the right time, and they're improving that with AI, and, and over the last couple of quarters, for the first time in two consecutive quarters in the last probably two, two and a half years, meta has shown growth in pricing. I think that's a very, very solid bullish indicator that now they can kind of pull down on the ad load and push on the pricing lever and essentially, uh, make a very, very profitable business because AI is doing the magic that people wanted AI to do, and I think meta is already there.