The market is having a tough time working out the right price level for Meta Platforms shares. The social media giant (Instagram, Facebook, Messenger and WhatsApp) is run by one of the world's best CEOs, 39-year-old Mark Zuckerberg. They have about 3.6 billion users, which is more than 77% of those currently using the internet.

In September 2021 they were flying high, thanks to stay-at-home Covid boredom, and very strong ad sales. They changed the name of the company, from Facebook, and announced a plan to spend billions building metaverse applications. Investors were not impressed, and the overall tech market was weak, so the Meta share price collapsed, losing 75% of its value.

Since then, they've bounced back magnificently because they dumped the metaverse idea, redeployed their datacentres for AI services, improved their ad-serving algorithms, cut costs and initiated a divided. The share price tripled. Zuckerberg is good at pivoting.

They also enjoyed a huge share price surge in February 2024, after knock-out results last quarter. They hit an all-time high earlier this month of $531.49 per share.
After the results released last week though, despite seemingly very strong sales and profit numbers, Meta Platforms had its worst trading day in 18 months, falling over 10%. Huh, what gives?

The problem seems to be that Meta is making even bigger investments in AI infrastructure than was anticipated. They plan to spend an extra $10 billion in 2024, mostly on more datacentres that run on lots of expensive Nvidia chips. Their latest large language model, called Llama 3, was released earlier this month. It is about as good as OpenAI's most advanced products, but is given away for free as open-source software.

Zuckerberg warned of years of aggressive spending before seeing a substantial return on AI. Here's a transcript of his key comments.

"I also expect to see a multiyear investment cycle before we fully scale Meta AI, business AIs, and more, into the profitable services. We've seen a lot of volatility in our stock during this phase of our product playbook, where we're investing and scaling a new product but aren't yet monetizing it. Historically, investing to build these new scaled experiences in our apps has been a very good long-term investment for us and for investors who have stuck with us,"

Our view is that we should buy quality businesses run by clever people and then wait for the profits to flow, and the market to place a higher value on their shares over time. Even after last week's collapse, Meta's share price is still up 28% year-to-date. We are happy to hold this one.

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Kering, the French luxury powerhouse, didn't start the year as strong as they'd hoped. Their first-quarter revenue dropped by 11% year-on-year, to EUR 4.5 billion ($4.80 billion).

Gucci, their star brand, saw a significant sales decline of 21%, bringing in EUR 2.08 billion in revenue. This dip is especially noticeable in China, where demand is sluggish.

CEO Francois-Henri Pinault admitted they face challenges, citing slow markets and strategic shifts at Gucci. Despite the tough start, there's a silver lining with the positive reception of Gucci's new collections.

Kering isn't alone in facing difficulties. The entire luxury industry is feeling the pressure, particularly in China, where consumer confidence is shaky, impacting luxury spending.

Investing in brand revitalisation, as Kering is doing with Gucci, could pay off in the long run. However, navigating through economic uncertainties and evolving consumer preferences won't be easy.

Solo living is on the rise, and so is loneliness. Could one be causing the other? - Your living arrangements are key to your mental health.

Scientists found a way to increase phone battery life by 50%. The only catch is that network operators would need to significantly increase the number of towers they operate - Phones use more battery power to reach further away towers.

Asian markets have edged higher this morning. Benchmarks rose in India, Hong Kong, mainland China, and South Korea. Japan is closed for Showa Day, the start of their Golden Week and the celebration of Emperor Showa Hirohito's birthday (he ruled from 1926 to 1989).

Last week, Naspers and Prosus saw gains of 7.7% and 5.5%, respectively, after Tencent revealed plans for new games like Dungeon & Fighter Mobile. This sparked renewed optimism that China's tech firms might face less stringent regulatory control from the CCP Politburo.

US equity futures are in the green pre-market. The Rand is trading at around R18.78 to the US Dollar.

This week, we'll be waiting for first-quarter earnings from Amazon, Eli Lilly, AMD, Stryker, Starbucks, Mastercard, Apple and Amgen.

Let the good times roll.