RESEARCHMETAabout 2 months ago12.1Kviews

Meta: cohort quality is improving, which almost never happens

Recent user cohorts reach the same revenue per user in roughly half the time earlier cohorts took. Improving cohort quality at this scale is rare and it compounds.

Grace Holloway@grace_holloway

The mechanism is payback period. Faster monetisation of a new cohort shortens payback, which raises the amount of acquisition spend that clears the hurdle, which compounds into the growth rate. The cohort table is in the supplemental. Users acquired in the last four quarters reach the same revenue per user roughly twice as fast as the cohorts from three years ago. The position: long on Meta, entry locked at publication and the exit dated rather than open-ended. The target is stated in the call block above and the horizon with it. Sized to the catalyst rather than to conviction, with the invalidation written into the kill-switch card instead of left implicit. A macro shock to advertising or discretionary transaction volume would overwhelm the company-specific case entirely, and it is not hedged in this position.

Discussion · 5

Pauline VidalJUL 31

I hold the other side of this. The depreciation schedule really is the whole disagreement. Would you underwrite this without the catalyst date?

Ines FerreiraJUL 30

Been on the sidelines on this one. The channel data is what makes this hard to dismiss. Interested in what the kill switch looks like in practice.

Grace HollowayAuthorJUL 29

Fair challenge. Invalidation is a close below the lock price on volume, and I should have written that into the card rather than leaving it implicit. (980)

Omri ShakedJUL 29

This is the clearest write-up I have seen on the name. The capital intensity point is the one I keep coming back to. Where does this break if rates back up another 50bp?

Grace HollowayAuthorJUL 30

Fair challenge. Invalidation is a close below the lock price on volume, and I should have written that into the card rather than leaving it implicit. (978)