ValueAct Capital has taken a $1 billion stake in Meta Platforms (META) as a constructive bet, and not an activist bet. ValueAct has made no noise about the stake in the $1.5 trillion social media company as its investment style is unlike other activist hedge funds. ValueAct CEO Mason Morfit is reportedly supportive of Meta’s aggressive push into artificial intelligence (AI). The news was first reported by CNBC, citing sources familiar with the matter.
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ValueAct’s Intent Remains Unknown
The exact intent of ValueAct’s investment remains unknown at the time as no public statements have been made by either party. However, unlike activist investors, ValueAct is known to work along with the management and board of the companies it invests in, with the aim of bringing about meaningful transformations.
All U.S.-based hedge funds, including ValueAct, are required to disclose their September quarter fund holdings by November 14. It is quite possible that Meta Platforms will start showing up in ValueAct’s 13-F filings going forward. Reportedly, the stake accumulation picked pace during the past few weeks.
Jeff Ubben-founded ValueAct’s motto is to invest for the long term. The hedge fund mostly invests in technology companies. Some of its other notable stakes include Salesforce (CRM), Walt Disney (DIS), and Spotify (SPOT). Following the latest news, Meta and Salesforce are the two biggest holdings for ValueAct, valued at roughly $1 billion.
Meta’s Ad Drama in Europe
In other news, Meta’s Family of Apps (FoA), including Instagram and Facebook, is expected to start showing “less personalized ads” in Europe. The step is taken to avoid any kind of risk or opposition from the EU regulators, which could also hurt its revenues from this key market.
Meta will start offering European users the choice of seeing these less personalized ad formats, free of cost. The contextual ads are based on the user’s current content at the time of browsing, rather than their historical browsing activity. However, Meta believes that personalized ads help improve targeted advertising and are beneficial to both users and advertisers.
The shift from personalized ads is bound to hurt Meta’s revenues. The company has already notified the EU regulators about the negative impact of this move. It finally depends on how many European users choose to shift base to a less personalized ad format. In its latest Q3 report, revenues from Europe contributed 23% of Meta’s total revenues.
Is Meta a Good Stock to Buy Right Now?
Wall Street remains bullish on Meta Platform stock. On TipRanks, META stock has a Strong Buy consensus rating based on 41 Buys, three Holds, and one Sell rating. The average Meta Platforms price target of $661.55 implies 13.1% upside potential from current levels. Year-to-date, META shares have gained 65.7%.
