Meta Bulls Pour Millions Onto Options Amid Superintelligence Buildout
$Meta Platforms, Inc.(META)$
On Monday, CEO Mark Zuckerberg said in a post on Facebook that the social media giant is constructing several multi-gigawatt data centers as it invests hundreds of billions of dollars to build superintelligence.
That signals the company's confidence in its long-term revenue outlook and opportunities in artificial intelligence, MT Newswires reported, citing Bank of America Securities analysts' note to clients Tuesday.
Five of the six block trades posted on Meta options so far Tuesday were bullish, with the buyers paying premiums ranging from $1.48 million to $3 million. The biggest of those bullish transaction involved the purchase of call options that give their holder the right to buy 100,000 Meta shares at $720 each in 24 days. That strike price is above the current stock price of $717.42.
Analysts' average 2025 earnings expectations for Meta rose to $32.23 a share as of Tuesday, from $31.48 on June 11, estimates compiled by Bloomberg show. BofA analysts' estimate is higher than the average at $33.36 a share.
"Meta is in rarefied air across the combination of scale, growth, and profitability, as the company's massive reach and engagement continue to drive network effects, and its targeting abilities provide significant value to advertisers,” JPMorgan analysts including Doug Anmuth wrote in a note last week, when they raised their price target on the stock to $795, from $735.
The company's Superintelligence Labs “will have industry-leading levels of compute and by far, the greatest compute per researcher,” Zuckerberg said in his post. Among the data centers the company is building is the Hyperion in Manhattan, which he said will be able to scale up to 5 gigawatts over several years.
That level of investment will likely gain investor attention in the company's next earnings call, as the market seeks justification for the stock's higher multiples, the BofA analysts were quoted as saying. Shares jumped 22% this year. At that level, the stock is now trading at 27.99X its 2025 estimated earnings, pricier than $Alphabet-A (GOOGL.US)$'s 19.13X.
Such a premium was justified, given Meta's strong top-line growth and ongoing cost efficiencies, the JPMorgan analysts said. Meta's first quarter revenue grew 16%, compared with Alphabet's 12% expansion. In the second quarter, the Facebook parent is expected to report a 14.3% growth, compared with a 6.1% seen for the parent company of Google, according to estimates compiled by Bloomberg.
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