Meta Platforms Is Embarking On A New Chapter – Consider METU Or METD

Meta Platforms META, formerly known as Facebook, has existed for over two decades, having gone public on May 18, 2012, and having since undergone many changes. Beginning as a start-up that ushered in the ‘social media' era, the firm has grown through acquisition over the years to become one of the most sophisticated media and digital advertising platforms while also being among the largest companies globally by market capitalization. After a deeply disappointing performance in 2022, Meta's performance in 2023 was far more encouraging and set the stage for the company's next chapter, artificial intelligence (AI).

In Q1 2024, Meta Platforms reported total revenues of $36.46 billion and net income of $12.37 billion, each increasing by 27% and 117%, respectively, compared to the same period in 2023. As noted in the firm’s guidance, second-quarter revenue is expected to be between $36.5 and $39 billion.

Trading In AI Capabilities

Meta is making material investments in AI. The firm anticipates full-year 2024 capital expenditures will be in the range of $35-40 billion, an increase from their prior range of $30-37 billion, as they continue accelerating infrastructure investments to support their AI roadmap. As part of this initiative, the firm says it will deploy a new version of a custom data center chip to address the expanding amount of computing power necessary to run AI products on Facebook, Instagram and WhatsApp. The chip, referred to internally as “Artemis,” will help Meta reduce its reliance on Nvidia’s NVDA AI chips and also reduce its energy costs overall.

In building chips for their product suite, Meta is looking to further the progress made last year when they unveiled the Meta Training and Inference Accelerator (MTIA) v1, their first-generation AI inference accelerator. MTIA, the company says, is a long-term venture to provide the most efficient architecture for Meta's unique workloads. As AI workloads become increasingly important to their products and services, this efficiency could improve their ability to provide better experiences for users worldwide.

The Bull Case For Meta Platforms

Meta reports seeing strong momentum within its family of apps, and the integration of AI within its product suite not only aims to enhance the value proposition of the applications offered but further entrench users within the ecosystem. Recently, at the firm's third annual Conversations Business Messaging Conference in São Paulo, Brazil, it was announced that Meta would allow businesses to use free AI chatbots on WhatsApp. CEO Mark Zuckerberg said the company will launch its Meta AI chatbot in Portuguese, its first language other than English.

Events in the political landscape should also aid Meta Platforms as U.S. president Joe Biden signed into law the Protecting Americans from Foreign Adversary Controlled Applications Act in April 2024, which is effectively a ban on, or a forced sale of TikTok from its parent company ByteDance by January 19, 2025. The video-sharing platform has raised concerns over potential user data collection and influence operations by the Chinese government.

TikTok has amassed 170 million American users and has been a formidable competitor to Meta's Instagram application. Should TikTok lose users as the ban goes through, Meta Platform's positioning within the social media landscape could be strengthened.

The Bear Case For Meta Platforms

As noted in their first quarter press release, Meta Platforms is increasing its legal expenditures, as regulatory developments in the European Union (EU) and the U.S. could significantly impact business and financial results. In Europe, Meta’s new privacy policy faces a legal challenge in 11 European countries over how the company plans to use users’ personal data to train AI models. Privacy campaign group Noyb says the policy – which will apply to Facebook, Instagram and Threads – provides users with no information about the purposes of the AI technology for which the data is to be used, which goes against the requirements of the EU General Data Protection Regulation.

In the U.S., the Supreme Court is considering dismissing a lawsuit that accuses Meta Platforms of misleading investors about the data-harvesting scandal involving political consulting firm Cambridge Analytica. The investors arguing the validity of the case say the scandal contributed to two 2018 price drops that cost the company more than $200 billion in market capitalization. According to Bloomberg Intelligence, Meta could face a $2 billion settlement if it can't keep the case from going to trial.

Gaining Comprehensive Exposure To Meta Platforms, Inc. With Direxion

Whichever way you believe the Magnificent Seven stock will go, Direxion's Daily Meta Bull 2X and Bear 1X Shares – METU and METD – respectively offer enhanced, pure-play exposure to the firm. These leveraged ETFs are designed to follow the daily performance of Meta Platforms, enabling investors to amplify their exposure to the firm's equity movements. Whether bullish or bearish on Meta’s current actions and future prospects, these ETFs present an opportunity to engage with the corporation easily. 

However, it’s crucial to approach these leveraged products with a clear understanding of their risks. While the amplified exposure can translate to significant gains, it can also lead to substantial losses. These ETFs are best suited for those who can actively manage the inherent risks of leverage and are looking to capitalize on short-term trends occurring with the firm.

Featured photo by Dima Solomin on Unsplash.

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Disclosures

Investing in the funds is not equivalent to investing directly in META.

An investor should carefully consider a Fund's investment objective, risks, charges, and expenses before investing. A Fund's prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund's prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund's prospectus and summary prospectus should be read carefully before investing.

The Funds have derived all disclosures contained in this document regarding Meta Platforms, Inc. from publicly available documents. In connection with the offering of each Fund's securities, neither the Funds, the Trust, nor the Adviser or any of its respective affiliates has participated in the preparation of such documents. Neither the Funds, the Trust nor the Adviser or any of its respective affiliates makes any representation that such publicly available documents or any other publicly available information regarding Meta Platforms, Inc. is accurate or complete. Furthermore, the Funds cannot give any assurance that all events occurring prior to the date hereof (including events that would affect the accuracy or completeness of the publicly available documents described above) that would affect the trading price of Meta Platforms, Inc. have been publicly disclosed. Subsequent disclosure of any such events or the disclosure of or failure to disclose material future events concerning Meta Platforms, Inc. could affect the value of a Fund's investments with respect to Meta Platforms, Inc. and therefore the value of the Funds.

Technology Sector Risk — The market prices of technology related securities tend to exhibit a greater degree of market risk and sharp price fluctuations than other types of securities. These securities may fall in and out of favor with investors rapidly, which may cause sudden selling and dramatically lower market prices. Technology securities may be affected by intense competition, obsolescence of existing technology, general economic conditions and government regulation and may have limited product lines, markets, financial resources or personnel. 

Meta Platforms, Inc. Investing Risk — Meta Platforms, Inc. is subject to a number of risks related to: its product offerings;  business operations and financial results; government regulation and enforcement; the ability to collect and use consumer data; data, security and intellectual property; and the dual class structure of the company's common stock, which limits the ability of shareholders to influence corporate matters.

Direxion Shares Risks – An investment in each Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning. Risks of the Funds include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Market Risk, Industry Concentration Risk, Cash Transaction Risk, Indirect Investment Risk, and risks specific to the technology sector and internet company industry.  Additional risks include, for the Direxion Daily META Bull 2X Shares, Leverage Risk and Daily Correlation Risk, and for the Direxion Daily META Bear 1X Shares, Shorting or Inverse Risk as well as Daily Inverse Correlation Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of the Funds.

Leveraged and Inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk and who actively manage their investments.Distributor: Foreside Fund Services, LLC.