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5 Jun 2023 - Meta Platforms - AI Winner

By: Insync Fund Managers

Meta Platforms - AI Winner

Insync Fund Managers

May 2023

Excluding China (where US social media companies are generally excluded) Meta Platforms Family of Apps are used monthly by a staggering 90% of the world's connected population.

Meta has a long history of investing into AI. For years, Meta has employed a world-class AI research team that has been publishing industry-changing research. Even though we can't see it, Meta has, for years, used AI to recommend posts in our feeds, moderate content, and target ads behind the scenes in Instagram and Facebook.


Meta is currently incorporating AI more visibly into his company's products. They are deploying AI technologies to assist advertisers optimise their spend across different mediums with the company saying it's improved its "monetization efficiency," or how much the company makes off of ads they sell on Reels, by 30-40 percent on Instagram and Facebook.

Insync significantly increased the Fund's exposure to Meta when shares were trading below US$100 in November 2022, as investors were fretting over how much the company was spending on the Metaverse. What was not appreciated was that 80% of their investments was spent on their core business including AI. Meta shares are today trading in excess of US$200.

Meta Platforms has 80% gross margin, over 19% net margins (which includes an expense/deduction of R&D spend of $35.4bn), and returns on invested capital in excess of 25%. It is an extremely profitable business which is in a strong position to benefit from the exponential deployment of artificial intelligence

Funds operated by this manager:

Insync Global Capital Aware FundInsync Global Quality Equity Fund

Equity Trustees Limited ("EQT") (ABN 46 004 031 298), AFSL 240975, is the Responsible Entity for the Insync Global Quality Fund and the Insync Global Capital Aware Fund. EQT is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT). This information has been prepared by Insync Funds Management Pty Ltd (ABN 29 125 092 677, AFSL 322891) ("Insync"), to provide you with general information only. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither Insync, EQT nor any of its related parties, their employees or directors, provide and warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product.

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