Pershing Square Capital Management, L.P. on Meta
Thesis
Meta's current share price underappreciates its long-term AI upside, representing a discounted valuation for a world-class business. The company is a dominant leader in the growing digital advertising market. Its current valuation of 22x NTM P/E is due to concerns around AI spending, but excluding discretionary Reality Lab losses, the core advertising business is valued at less than 17x NTM P/E.
“We believe Meta’s current share price underappreciates the company’s long-term upside potential from AI and represents a deeply discounted valuation for one of the world’s greatest businesses... Excluding Reality Lab losses, which represent discretionary growth investments, Meta’s core advertising business is valued at less than 17x NTM P/E”