Rowan Street Capital, LLC on Meta Platforms, Inc.
Thesis
Meta continues to grow at an exceptional rate despite its enormous scale, with trailing twelve-month revenue above $228 billion and growth near 30%. Rowan Street sees measurable returns from AI already appearing in engagement, ad impressions, pricing, clicks and conversions, while Advantage+ has reached a $75 billion annual revenue run rate. The fund believes Meta's business is stronger than when it first invested in 2018, with wider competitive advantages and greater long-term earnings power. Management's history of making large, unpopular investments before their economic benefits became obvious gives the fund confidence in the current AI capital-allocation cycle, even though the eventual returns remain uncertain.
“Overall, our conviction in Meta has only increased since we first invested in 2018.”
Key risks
- Capital expenditures are extremely high and the return on the AI infrastructure buildout remains uncertain.
- Reality Labs has yet to demonstrate attractive economic returns.
- Emerging AI opportunities may take longer than expected to translate into earnings and cash flow.