Meta 第三季度表现卓越：营收增长 26%，广告业务持续复利增长，Muse 有望将 ARPU 提升至高于全家桶应用的水平，并在两三年内带来数千亿美元的自由现金流。但即将进行的股权融资使得在当前价位买入变得困难，即便股价在明年 1 月前被推高至 750-780。

Today we have Meta and Tesla. I'm going to put a poll right here in the chat. Which one do you guys think outperforms? I think the majority of us and our collective audiences owns Meta more than Tesla, but I'm pretty sure a decent chunk of our audiences own Tesla.

So, put in the chat which one you own more of. For me, it's definitely meta and I think for the rest of these guys, uh, it is also meta.

Well, I have no Tesla anymore. I have way more meta. So, there is that. There is just way more to talk about Meta today than there is about Tesla. Just like there is way more to talk about SpaceX than there is about Tesla as of today.

That's just the reality of it. Unless they suddenly come out with something optimus, but I don't think that they'll give us they'll give us way more information during the call.

So meta I would love to hear way more on muse adoption subscriptions enterprise I mean talks we with saw some enterprises businesses business adoption uh what they're seeing there WhatsApp business we know that that that has been doing very well for them over the past two years or so

I just don't see how the capex number stays the same after after SpaceX yesterday is that going to have a negative impact on the talk.

Well, previous quarters, yes, this quarter, if they can mix the increasing capex with the okay, Muse adoption is through the roof. We just need way more compute in order for for this to go globally, then maybe maybe that that's going to be good enough for them.

I still think that the core business is going to is going to be completely fine. The stock did pull back a little bit over the last couple of days. So, we are close to $700, which is still still cheap in my opinion, but uh I am biased because I hold shares, but yeah, I'm expecting good report and definitely an exciting call.

Jose, I know you've been buying Meta a lot over the past couple weeks and months. Your thoughts on his earnings? Yeah, so I I I think um what I'm super excited about Meta is to finally get some more clarity from Suck.

I think last earnings the market really wanted him to talk more about selling compute and Mark really kind of pushed he's like that's a great market but we believe selling intelligence is higher margins and and and a higher a better product to do with our compute now that Muse is getting a lot of traction.

I want him to show a little bit more details on that on on that business.

Right. We just heard from SpaceX yesterday that selling compute is extremely extremely uh positive for our business. So, does Mark still believe that the right way to go about it is to sell intelligence?

And is Muse accelerating that or are we getting some business results out of out of that right now?

Because if we are, I think if they do increase capex, the market would be a lot more um would be more right with that case. Like if they go, look, we're actually making money out of Muse right now.

We're actually seeing improvements and because of that, we're going to increase our capex. I don't think the market will punish it as much opposed to if it just says, you know what, we're just going to increase cap is because the man is crazy.

Give me a little bit more, a little bit more meat.

Um, and and then um yeah, so that's one of the things kind of the muse interaction, the monetization, and if we see an increase in capex. Tanner, are you also looking for a little more meat out of Zuckerberg today?

Well, um, yeah. I mean, I'm I'm excited to hear from from Mark um and the rest of the team, but no. Okay, jokes aside, I'm really interested to hear how their operating expenses are uh will adjust to the Muse blowup.

We essentially went from, you know, a nent amount of people using Muse Spark 1.3 to the world using Muse.

So, that I'm really excited about, but we do have to factor in that $12 billion hit. Um, my understanding is they're taking it this quarter rather than trying to uh advertise it across a larger time frame.

So, there will be, from my understanding, a $12 billion hit to net income this quarter round. I don't know if Wall Street has adjusted numbers, so I imagine

And that's from the the legal expenses due to the correct lawsuit, right? Yeah. And then today we got hit with potentially another $25 billion penalty. However, I think that'll be appealed and that that'll be a lot longer before we end up seeing anything from that.

Um but the $12 billion that is what Meta agreed to pay and that that's settled.

So um they are likely to miss on EPS. It's just how much on revenue can they end up um beating by

But right now, I mean, I'll focus on Meta. Uh, I've got Meta shares. I don't have Tesla shares. So, I'm excited to listen to the call.

Now, a couple things on Meta. So, Tanner talked about this $25 billion New Mexico uh potential penalty. This would be like disgusting for their EPS guide next year if they actually have to pay this.

I agree. They'll probably appeal it, but nonetheless, not the best headline today.

And then, I don't know how many people saw this, but unfortunately, this was reported by Semaphore. Meta plans to issue new non- voting shares to fund AI investments without diluting Zuckerberg's control.

Meta could officially announce the non- voting stock plan as soon as Wednesday alongside quarterly earnings. I doubt if they're going to do this, they wouldn't announce it today.

Which means if they do it, have they already pre-negotiated some stock sales with like a Birkshshire type of company? Are they just giving it straight to the public? What is the price that they're diluting at?

Does Zux think, okay, 650 to 700 is a good range? Like, I think there's a lot of questions um that we're going to have to deal with today.

Anthropic is officially rolling out something called Claude Duet. Yes. Wait, what?

so everyone says do it versus do it. You say do it. That's those two people that go up on stage and they're speaking together. That's a do it. No, it's not. No, when you say it like that do sometimes.

I mean maybe. Anyway, the point is Enthropic just entered into Muse's category which obviously means Enthropic thinks it's important but nonetheless that's more competition on meta as it falls below 700 right here.

Not to mention, Zucks has to actually give us a good call. The past two quarters have been, in my opinion, as a shareholder of this company, just not good performances by Zucks on the call.

So, hopefully we get some good numbers and uh we can withstand it here today.

The majority of people in the chat are saying Meta will do better than Tesla.

So EPS on Meta we're looking for 540 uh on the gap basis, 63 billion of revenue. I think both companies are probably going to beat the top and the bottom. Meta maybe misses because of the legal expenses, but uh I think it's going to be about the guide, Meta Muse,

But I think Meta definitely will have a bigger reaction up or down versus Tesla given how aggressive the algos are on another number that's very important to Meta because it's treated like a hyperscaler.

But just capex, I mean, I think the guide for next year, correct me if I'm wrong, Jose, is like close to 180 billion. And if that goes to like 250 or something,

but I mean we were just I was just talking to Neil earlier this morning. If right and we talked about it, right, Neil was like if SpaceX is trying to do 10 gigawatts of compute next year and it's about what 50 to 40 to 50 billion, you're telling me SpaceX is planning on spending north of 300400 billion in capex and every other hyperscaler or big tech is going to be like you're the only one.

We're going to stay here with our 180200 billion dollars. So, um I I don't know. I don't know if it's going to be this quarter or next quarter, but we're going to be surprised by the capex races we're going to start to see.

Yeah, I think that's definitely a number that Wall Street's going to care about as well. First time where two of my major holdings report earnings on the same day. I'm shaking uncontrollably.

I'm looking for those meta numbers. I think implied volatility on both of these names is around 5 to 7%. So that's what you should be expecting up or down on these results.

Huge EPS miss, 44% miss. Called that. And then revenue beat by 2%. So instead of 63.4 billion in revenue, we got 64.6 billion. Revenue is up 26% year-over-year. In EPS, we got $3.83 versus $6.80 expected.

Now, once again, the EPS miss is because of the 12 billion of tax uh legal expenses. So, that shouldn't be the craziest thing that the streets are going to react to. Although it was a miss, it was very well like this was expected.

So, you're you're probably not even going to see a large reaction just off that.

capex 145 billion. They did not increase 2026 capex. I don't have a 2027 guide. Meta has established a new non voting class uh share of common stock called class C shares. No um no no headline on how much they're going to dilute by or if they're going to announce it today.

Revenue 64.6 versus 63. That's a beat. EPS missed by 40%. Operating margins 20%. Operating income was 12.9 versus 20 billion. That has to do with the legal expenses.

Third quarter, Reality Labs revenue missed pretty badly as well. 443 versus 517. again small part of their business but that is a miss. Uh operating loss was a little bit aggressive as well 4.13 billion

ad revenue 63.06 billion versus 61 so they definitely beat on the ad revenues and then overall fourth quarter revenue 64.6 versus 63.3 stock is up two and a half%.

stock is up two and a half%. They did approve the new class C common stock that has non voting do we say that capex at least on the bottom range did increase for this year instead of 130 it's now 135 they increased about by five billion on the on the lower end

I'm looking through Meta's metrics right now. These are just insane. They did 10% more ad impressions year-over-year. How how many more people did they add? Let's see. Like but anyway,

you guys are saying you people are saying two for one stock split. I do not see that anywhere. Cool. I also don't know why they would do it. No on meta. Like why would they do a two for one?

They would if anything it would be like 3 to one or five to one. Uh I do not see that headline.

it's the new shares. It's uh okay. So, Meta is creating a new class of non-voting capital stock. It declared a one-time stock dividend of one class C share for each outstanding class A class B, which works out to a two for one split.

Does that mean we're going to have I actually don't know what that means. I don't know if that's internally or if that's affecting every shareholder. I gen I you guys I I have no idea.

their daily active people metric went up 3% year-over-year while ad impressions went up 10% year-over-year and then average price paid per ad is up 14% while also reducing headcount by 15%. I mean this is a juggernaut of a business.

Yeah, that is I mean that the fact that they keep finding more people is amazing. more people charging them more ads and no one's leaving and and the and the purchasers of those like the the companies are happy to pay 14% more than last year on top of also doing more ads like those are two compounding curves at the same time

and then the ads are getting better and better as well like very entertaining ads I would say of obviously AI generated ones but still keeps me watching someone said bots. It can't be bots if the price per ad is going up because the conversion has to be going up in order for the customers to or for the for the businesses to be comfortable paying more.

Yeah. Like even if bots are clicking ads, if it's not leading to sales, companies aren't going to pay more to to access those users.

So, we're going to get a another class of shares for to trade on the stock market, but I don't know if that means if you have a 100 shares, you're going to get 200 shares. Now, based on that split,

they they're going to change the the T and the A around. It's going to be meta and meta P.

Let's get some more coverage on Meta and then we'll get IBM as well. Um that is Meta's highest revenue ever for a quarter. Now the company also guiding to fourth quarter revenue of between 73 and 76 billion.

The midpoint of that ahead of the consensus estimate.

As for capex, Meta is raising the bottom end of its capex range from 130 billion to now between 135 and 145 billion this year. Meta reporting GAP EPS of $383. That number is impacted by a nearly $10 billion previouslyannounced settlement.

The company says excluding that settlement, adjusted EPS would be $7.40.

Now, another big piece of news here from Meta. The company's announcing plans to create a new class of non- voting capital stock, which will be distributed to all existing stockholders through a stock dividend, effective, effectively a twofor one stock split that will begin trading in late January.

Now, as for 2027 guidance, the company saying, quote, "Though we are not providing a fullear 2027 revenue outlook, the benefits our AI investments are delivering to the core business, combined with emerging opportunities from model advances and product launches position us to sustain strong overall revenue growth throughout 2027."

All right, we're going to have the meta call in a bit. It sounded like what she's saying is people will get an additional share, but I think it also could be interpreted as just a different version of Meta.

So, we'll get some clarity on that. Uh, but Meta is up 3% right here.

Meta 3.5 did touch 733, now back to 722. Um not seeing much on the deck about Muse yet. I imagine that's what they'll be talking about on the call, but the numbers themselves outside of the legal expense seems like the market is happy with it.

Meta is not providing the full year 2027 revenue outlook. Yeah. So, we're probably not going to get that on the call. By the way, Zucks uh Zuck said, "Our investments are paying off.

The core business is strong and we're seeing velocity across the board."

But why would they give us 27 outlook since it's Q3? Um I think maybe they're preparing people that they're not going to give it at all.

How did you guys read that? to me is that they don't know, maybe I'm just a little too much into the AI space, but it's like they don't know how much money they're going to be making out of these MU solutions and some of these new AI solutions that they can't honestly give us a strong projection on what they see for revenue.

I just don't they gave us before in Q3 numbers for the next fiscal year. Most companies, they actually stated it on their press release, Neil, that they don't want they're not going to give it.

It's um they were like we're not giving and I thought it was weird too Neil normally they don't share anything on quarter 3 but they still stated that on their press release that they weren't going to give fiscal year 2027 outlook.

Yeah and maybe maybe we'll get some capex guidance but if not then shareholders will have to wait.

I know it's only up 1.5%, but it doesn't look like anything on this earnings call or anything on this uh earnings print is necessarily bad numbers wise. I mean, you do have year-over-year growth in the business.

Well, revenue is down year-over-year, but by like 1%, so it's not that bad.

Meta Zuckerberg may relocate from California if Prop 40 passes. Where does he go? Miami. He's definitely going to Miami. He's not coming to New York. The fact that Meta had to disclose that is interesting.

Maybe he moves the headquarters as well. Yeah. Yeah. Austin's another big one, I think, as well, right? Yeah. I take that back. It's actually Austin. He'll probably go to Austin.

UFC. Joe Rogan. Miami, I think, is the finance one. Or or is it the other way around? No, no, you're right. You're right. Um, interesting that they have to disclose that.

Um so I just put the part from Meta's PR about the two for one split and I asked Chatbt, "What does this mean?" And she said, "If you currently own a 100 shares of Meta, here's what will happen.

You will get 200 shares now. 100 will be class A, 100 will be class C."

Yes, Google did almost exactly the same thing in 2014. In fact, Meta's proposed structure is remarkably similar to Google's. Wow. So, we're getting an extra share of Meta, folks.

But does that So, that's not going to change the stock price. That's not going from like 700 to 350. That's just going from if you have 100 shares 50 shares of this version of meta and then 50 shares of that version of meta.

So it's not I don't know it's not really but even that doesn't make sense. So like if I get equally split then what my voting shares were before become non-voting sh that that doesn't make sense. How does this work?

Your voting shares still stay voting shares just the other ticker has no voting power. Right. But I don't get split into that.

I don't know. It's the stock going up. That's the only thing that matters. Yeah, it's a little I think they'll clarify on the call, but it feels like it's very similar to that just wasn't around.

No, it doesn't have to change the stock price though, right? Because if you have a 100 shares, you just get 50 of the same price of a different class. Just like if you had a hundred of the same class.

Oh, no, no, you're right. You're right. I'm I'm dividing by two. You're multiplying. Yeah. So, then it has to change the stock price then, right? It h it's half. Yeah. Yeah. You're right. So, this thing's going to 350.

So, I Let's say we've got 100 shares of Meta. I get 100 shares at and they're both become 350 or whatever the price is.

Well, this is what I initially said and then you guys said no. But that's what it is. It's 350 a share. Yeah, but okay. But that part doesn't matter. It this is the important part that got me confused. your your voting share of the 350.

It it will get cut in half, but the voting share of the 350 is not going to change and it's not going to impact your ability to vote for the company and it won't change the outstanding percentage of the voting pie.

You know, your your percentage of ownership stays the same. Your percentage of ownership of voting shares stays the same. It's just half the shares won't matter and you're only going to vote from the other half.

And then you're going to get higher which ones you want to sell. So it's so so we all get double the amount of shares now. Uh we can all run more at half Well, yeah, basically.

And theoretically, he could run more calls. But Z is not doing this out of like a the stock's too high.

Yeah. He's not doing it to like do a seven for one, 10 for one split. Usually he's doing it to dilute. I mean, that's the real takeaway from this. It's just a question of when they're going to announce that dilution because you have to increase.

Uh if you're going to dilute, you need to make sure your voting class share stay this stays the same so he doesn't lose control, but that there's physically more shares that are out there to sell to the public.

Yeah. And so it seems like that's the point of all this as well. He wants to raise, but he still wants to hold the the scepter. He doesn't want people coming in to be able to change the vote. the the the annoying part about that is and I know the stock's up after hours and maybe Zucks pumps it some more, but inevitably they're not doing this if they were not going to dilute.

Like it literally makes no sense for them to do this without a plan to offer more equity to the public. So at some point either in the next couple of weeks or maybe they do it in 2027, but there will be a an equity raise like Google did.

Now Google did 85 billion. The question is how much is Meta willing to to do it? Maybe it pumps to 800 by December and that's when they do it. But it looks like it will happen now.

This this inherently is not dilutive. It it's what comes after this. They're they're they're setting the stage for future dilutions because they realize that they're going to have to raise a bunch and they don't want to change who owns the voting share, which is Zuck.

Yeah, we didn't get a lot of information on Capex or Muse, so I think that's what the call will focus on and maybe that could send the stock even higher, but we're not seeing there.

Tanner, they they want to dilute the non voting shares. That's the one that they're going to now they have the upright. They're splitting it up. So then later on they can be like this is the one we want to dilute so I can still hold the crown.

Okay. Okay, the call is still not live yet. Should be getting started very soon. So, we'll have Meta for the next hour. Then, we'll have Tesla. Uh, again, I think the big thing for everyone is, you know, the market is not upset at these earnings even with the big miss.

The market knew it was kind of it was going to happen. Muse capex. I mean, he's probably going to get some questions on the equity raise, but he'll probably won't like give an official answer.

If the call can go well, this thing probably holds, you know, the 4% move. And if it dumps, then it's got to be something he says that the street's just not going to be happy about. But it is up.

The goals for this next phase play to many of Meta's strengths.

In addition to Muse, uh we have also seen that engagement per person in Meta AI has more than doubled since April um when we started rolling out our new models.

Q3 total family of apps revenue was $64.2 2 billion, up 26%. Q3 family of apps ad revenue was $63.1 billion, up 26% on both a reported and constant currency basis.

In Q3, the total number of ad impressions served across our services increased 10%. The global average price per ad increased 14% year-over-year, driven by ad performance gains and improvements in macro conditions relative to Q3 of last year.

Family of apps other revenue was $1.1 billion and grew 59% driven primarily by WhatsApp paid messaging and subscriptions revenue.

Within our reality lab segment, Q3 revenue was $443 million, down 6% due to lower Quest headset sales, which were partially offset by continued strong growth in AI glasses revenue.

Q3 total revenue was $64.6 billion, up 26% on both a reported and constant currency basis. Q3 total expenses were 51.6 billion, up 68% compared to last year, and included a $9.9 billion charge related to the August 2026 multi-state attorneys general agreement.

We ended Q3 with over 66,000 employees, down 12% from Q2 following the May 2026 headcount reduction. Third quarter gap operating income was $13 billion, representing a 37% decline year-over-year and a 20% operating margin.

Excluding the Q3 legal charges related to the affformentioned legal settlement, our third quarter operating income would have increased 11% year-over-year. Our tax rate for the quarter was 24% above our outlook range, primarily driven by the non-deductible portion of legal expenses.

Net income was $9.9 billion or $3.83 per share. Capital expenditures, including principal payments on finance leases, were $34.9 billion, driven by investments in servers, data centers, and network infrastructure. Free cash flow was2.1 billion.

that we make make available to advertisers primarily through the advantage plus suite but features that make it easier for advertisers to uh quickly and seamlessly generate whether it is you know um creative or take an image and generate video or generate sound all I think in service of making the um ads increasingly personaliz iz for the person that they're being served to.

So I would say we feel like there is, you know, meaningful runway across all three of those things. Um your second question was about revenue growth next year. And so as I mentioned, I think we're both um you know, feeling good about the uh budget investments that we expect we will make in both core ads and engagement initiatives next year.

We're also, you know, building several new AI businesses and we expect that those can begin contributing incremental revenue in 2027, but more importantly can scale meaningfully over time and those will include monetizing you know our AI products through subscriptions, transactions, advertising, developing enterprise offerings um as we talked about in one of the earlier questions.

So I would say while many of these opportunities remain early and our near-term focus is really on building highquality products and achieving product market fit and scaled product market fit, I think our track record of reaching, you know, billions of people and building businesses at scale makes us feel good that AI is going to become a meaningful source of revenue diversification over time.

Uh Mark, coming out of Connect, you know, it kind of felt like we were ushering in the next era of the company, you know, and the business reorienting around kind of Muse at the center of everything, you know, is that a fair assessment of of kind of how things are going internally and, you know, and if so, can you talk a little bit more about how some of the business mandates and outcomes may have changed?

And then Susan, you know, it was interesting to kind of see the the launch cadence where enterprise announcements kind of preceded some of the small business ones. and you know appreciate your comments on you know some of what's going on there around the SMB agent opportunity but can you just share more details on kind of the work required to to serve and scale the offerings to SMBs thank you

yeah I mean I can talk briefly about the the first one I mean look um it was more than a year ago that I think I wrote the the letter about personal super intelligence as the north star for the work that we're doing here And it basically it fits with this line of work that we've done for more than 20 years at the company that is focused on empowering individuals, giving people a voice, giving people the tools to connect in the ways that they want.

And when you extend that to the work around AI now, um we think that the the the most important thing that we can be building for this next generation of techn of technology is giving is is basically putting the power of this technology in everyone's hands, which is the personal super intelligence vision.

So, we've been working on this um for a while and this is when we did the reboot around MSL and and and building the lab.

A lot of it was this idea that we need to uh build models specifically to be good as personal agents u that we'd be able to build the best experience by owning and building and designing ourselves the endto-end technology.

Um so that includes the the models and then the the agents and um this has been this has kind of been in the works for a while. I mean the the uh the vision around the glasses has also been this.

I mean the uh we've wanted to build the next generation of hardware platforms so that we can deliver the best endto-end experiences to people.

And I think that that's starting to come together as well and I think will even more over the coming years. So I mean these are these are long-term bets. I I feel like this is what we're here to do is make long-term technology bets and design the best experiences end to end that we can for billions of people around the world.

And I think as long as we continue to do that, then you know over time the business takes care of itself as long as you know we continue executing well, which I'm really proud of the team for how we're how we're doing on that.

Thanks Mark. Um your second question was around Muse for small business. Um so we launched we launched that which you can think of as an expansion for Muse. um in late September and you know rather than a separate product it's kind of a new a set of new skills and connectors inside the existing Muse app aimed at helping SMB owners uh run operations you know find new customers it connects to a business's you know for example Instagram account analytics or Facebook pages or meta ad accounts in a few clicks along with dozens of thirdparty connectors that businesses already run on like Shopify, QuickBooks, Canva, etc.

It already understands what businesses sell, its brand voice, um, what customers are asking for and Muse can take actions including analyze ad and content performance, draft campaigns, customer responses, flag issues, you know, and we are actively listening to our SMB users to understand um, what their top use cases are.

you know, we are um seeing them use it for ads optimization um for direct message organizing, use it to expand their sales footprint, uh to keep their website current based on, you know, things like inventory and um new products, um to deal with employee load balancing.

So, we're we're pretty closely following how businesses use Muse to make sure um that we are being thoughtful about new features that we release in Muse to make it maximally useful and productive for SMBs.

I'd also say, you know, we have unique touch points to again, um, you know, I mentioned in my opening remarks, 500 million self-identified small businesses and, you know, we think that many of the investments that we make in consumer products are going to carry over to help power those businesses.

Also, we have, uh, multiple excellent channels to surface those opportunities to small businesses globally. Um so you know this is a place where we feel like we have an existing extremely strong platform and we're very excited about it and we also you know believe the transition to AI has broadly unlocked um has broadly unlocked enterprise as a new opportunity for for us as well.

Great. Mark, you touched on this earlier, but um could you elaborate a little bit on maybe some high level uh metrics around the the per user cost structure of Muse today and then how you kind of see that that cost curve coming down uh as you go forward?

Um and what are some of the things you're doing to uh to bring that cost curve down? Thank you.

Um I'm happy to to answer that and Mark, you should add anything that you feel like I'm missing. you know um we aren't we don't have sort of uh specific numbers to share around the cost structure of muse today but of course it is as Mark said pretty compute expensive um and making sure that we are focused on compute efficiency is going to be one of the key vectors towards being able to both scale muse and grow it into the business that we want

um I think there are a couple dimensions of achieving that efficiency I think some of the more um the more nearer term pieces you know include things like leveraging you know off- peak or spare computing capacity you know to run some sets of jobs um using smaller models there's a lot of work to be done across different inference efficiency initiatives like all in service effectively of higher GPU utilization um and other product efficiency work we can do also

and you know I think over the longer term you know I think this is a place where we expect that we're going to be able to over time as LLM scale get more tasks you know done with fewer tokens and also rely on AI models themselves to help us improve the efficiency of the software that we use to run the models.

So I think um it's a place where we both feel like there is a lot more uh a lot more work on our efficiency roadmap that is going to help us you know bend the curve here and we also expect that the sort of arc of how the of how the sort of AIdriven technological advances are going to apply here will also help us achieve larger savings over time.

Okay. Thanks. Two questions. You know, there's a bit of a playbook or there has been at Meta over the years when you uh when you uh surface new surfaces and uh you know, you build up the user growth, engagement, then you layer in monetization.

Do you think it's sort of a similar playbook here or has does it have to be a little bit faster with Muse just given that the costs associated with it are materially greater arguably than launching those services in the past?

And then just a clarification on that commerce data point that you provided about 25% of users and the $200 or greater uh uh um ASP. Are you including in commerce travel uh uh purchases or is that just a retail data point? Thank you.

My guess uh I think that we are going to work on monetization somewhat sooner on this than our normal playbook for a couple of reasons. Um one is uh just the size of the numbers that we're talking about in terms of both the costs and the and the opportunity I think make it kind of important to to make progress on that in order to be able to scale it.

Um the other is just that such a large part of what people are doing is commerce. And to your question, uh that does include travel too. Um I think we might consider travel a different case, but travel is actually one of the other top use cases for for Muse.

Um is is basically people planning that out and planning different kinds of things that they would get than they might get through um our family of apps.

So I think that this is this is going to be um an important thing for us to work on to deliver the consumer value that people want and in doing so I think we will be able to build a model where we get a percent of the value that we are uh helping to create for people.

So, I think that that's going to be it's going to be very important to kind of get the the math on on on all this to work out so that way we can um continue the compute buildout that we want to build in order to get this to reach everyone at scale.

Um, and in addition to everything that Susan said in response to the last answer, I I would also just add that like we just see this this trend that, you know, year-over-year, you know, I just expect that we will be able to deliver the same intelligence that we have now in Muse Wonder or frankly any of the the current frontier models at a fraction of the cost in a smaller model a year from today.

So to the extent that that represents some kind of baseline um level that people you know seem to you know that that kind of is sufficient for product market fit for muse I think that we will just continue through kind of continued model development um make progress on that efficiency.

The thing that is um and of course less clear is that I don't think in a year from now most people are going to want to use the current model level of intelligence um because that's also going to make progress.

So I think we're going to need to work on all of these things, both the the revenue pieces of it and scaling the different uh aspects of that as well as progressing on the model development and all the efficiency in order to be able to um you know both fund and support the compute buildout and reach billions of people which um again we want to get to that as soon as possible.

Part of the reason why we're not, you know, just charging everyone up front to use this is we want to establish this Muse network and we think that it's going to be more valuable for people at scale when there are a lot of people and businesses using Muse so that way um they can collaborate and work together.

I think that that's really a very important state to get to and one that we're quite excited about and again um I don't think that there are many companies in the world that are well situated to to be able to do that is in the way that we are.

I think we are very well situated to do that and and we plan to push on that quite aggressively.

Do you think they're actually going to do 13? Yeah, probably. I mean, Meta said they're going to do 14. It's within the realm of what other names are saying.

Now before we talk about Meta uh the reason everything's dumping after hours for those that are asking is because of this headline. US and Israel are reportedly preparing for renewed military operations against Iran.

I don't have too many details on this other than there's something to do with Saudi Arabia here. It looks like we talked in the morning that Israel did want to attack last month and Trump stopped them and now it looks like Trump is ready to re-engage.

Maybe this is false, but this is from the Wall Street Journal. Um, I think this and maybe a lackluster meta earnings, even though I think we all thought it was pretty good, is what's taking the cues down after hours.

No, it it was everything I wanted and more. Um, I mean, he talked about Muse, right? So, he he mentions Muse is expected to be bigger for the family apps business in the future.

And so, I think he's really really excited about Muse, more dollar cost there. Um, he continues to talk that compute constraint is an issue. uh and and just with um with Muse development and then just with them kind of doing the voting sea even though uh the the C-shares even though they didn't say that they're going to use it just thinking that they're going to have the opport just building this plan I think we're going to see some crazy number in capex uh for 2027 uh more importantly because right this was the first quarter they were free cash flow negative so if they and that's that they're expected to do more revenue growth so more operating cash flow in the upcoming year and even with all that they still expect to have need some form of potentially some funding around.

I think we're going to see um some crazy number for Capix. So um Muse was pretty great. It seems they're pretty excited for that for the family apps of business and then more importantly um the amount of compute constraint that they are seeing.

I can't imagine what the rest of the industry is seeing.

I think this was an exceptional quarter. I know the stock is giving back pretty much everything. I think there's two reasons for that. One, the Iran headlines. Two, dilution's coming.

Like even when she was asked about it, she was like, "We don't have any plans to talk about future capital raising yet, but there's no reason you issue a new class of shares if you're not going to do it."

Um, yeah, and it's just going to cost a lot. like like the buildout is just it's I think the numbers for 2027 are going to be much higher than 2026. I think that's going to be part of u what we end up seeing next quarter but it I don't want to talk about the bare case. I want to talk about the bull case.

let's talk about the bull case. Um the the the commentary on Q3 I thought that was what what really shot up the stock is that they believe that uh Muse is going to have higher average revenue per user than their family of apps.

Uh so this could be additive to their overall amount of um arpoo and then on top of that if they can serve a billion people then that would obviously be really exciting. This was the big quote, right?

Meta's apps already generate several hundred per user annual and expects Muse to earn. I mean, if Muse gets that RPO up by a factor of two to 3x, this company's going to be doing hundreds of billions in free cash flow in a couple years, even with the capex.

I mean, to say that over a quarter of weekly activives buy through Muse already, the average purchase of over 200 bucks. So, it is already doing its job.

Yeah. Yeah. I mean, the core the core business keeps doing what it should be doing. Now you have Muse which answers all of these oh why are you spending so much money on on GPUs etc. like okay now we have news now we have a product and we can start and they even said that we are going to monetize it way sooner than the other products that we've launched which I think is also a pretty a pretty good thing and why not like the only reason also the only reason they're not globally they're not launching this globally yet is because well they they cannot at the moment so imagine they open up to to Europe eventually at the end of the decade I don't know um but yeah the the Our pool opportunity here is is huge.

I mean, yeah, the numbers were better on Meta across the board. The call was obviously better. I think the other thing is the the the uh the 40% EPS miss like a year ago the stock was down 12% when that happened.

This time the market moved on, right? They didn't have that same reaction cuz it's not going to happen again. Like there like there is a specific reason why they had that onetime impact.

Ad impressions were up a lot. I mean the stock fading is probably just the Q's dumping after hours. Um, let's talk about the dilution. I think it's going to be tough to buy Meta at these levels because I think even if they hype it up to 750 780 going into January, look, if Google did 85 billion, I think Zux is going to go for 100 billion.

Why not, right? Like the way he was talking about Muse is like we literally can't expand it because of how compute intensive it is. He didn't explain uh the unit economics on the compute in in intensity.

They sidestep that question because they're obviously losing a lot of money on it.

Well, the dilution would be huge if they were to go for more than what Google did. Well, what if the stock is a lot higher than what if it's like 2.5 trillion by the time they dilute?

Like there's no way they dilute at $700 a share. I feel like they're counting on a pump. Like what if Meta drops to 650? Do do they still dilute in January?

They said that the hardware is going to drive more subscriptions. I already pay for Muse Wonder. Um but I can't wait. You know how many times I I go to pull out my phone, unlock my phone, go to my app, turn on the voice thing, then speak, and instead I can just go like this and just go, "Oh, yeah, send me that email.

Remind me to go, you know, get my wife a coffee." I don't know. But it's just going to be way too quick.

um so going to your glasses point I mean if Zuck's explicitly saying we don't want to make money off the hardware but we want to build you know the the most interesting thing Zuck said and I'm curious what people think about this is we want to build a network of people using Muse it sounds like he's trying to build another network effect for billions of small business billions of consumers and hundreds of millions of small businesses is effectively contributing to this Muse network effect before they turn on the monetization. My question is what does that mean?

He does want to he doesn't want to be a slave to the Apple App Store. So, he wants to build a so-called App Store connectors in the Muse universe. But from what it sounds like, Neil, you've been a user of this network, but on Grockbot's side, like you said, you downloaded one of Farzod's bots today cuz I don't have access to Muse.

So, if Muse creates something similar and obviously they can start putting ads on these types of products, Chacht is generating uh monetization that way. And I mean, Chach can do a lot of great things, but in the ad space, I would trust a name like uh like

I would trust a name like uh like Facebook to be able to monetize it quite well.

That sounds like a pretty freaking big business at meta scale if they figure that out.

So Zux has an 11 million download lead right now, but I don't think it's like a foregone conclusion that Muse is going to win this ecosystem. They are scaling the fastest and they have all these small businesses they can work with, but so does Google.

So I guess that's still a question. It's just what premium do you put on Muse, especially when you're not sure is it going to really generate a couple hundred billion dollars of revenue over the next 10 years or is it going to be like Reality Labs, which is going to lose another 20 billion next year when Zuck's talked about it on the call.

Yeah, but the big advantage that Meta has is that I mean most of their apps are apps to communicate. So it's anyways chat. So if you just have to stay in your chat app to just talk with Muse instead of downloading an extra an extra app, I think they they can win.

Like if you can talk in your Instagram DMs to Metamuse, in WhatsApp, in Messenger, whatever, like the billions of users are already there,

something that I guess Meta is working on quite aggressively to make sure that the ecosystem grows quite quickly because Grog doesn't have a lot of connectors either. Claude has a lot, Chach has, Gemini doesn't have that many.

If Google launches a version of this that's like as good instantly I will be on Google and I love meta you know like I own way more meta than Google but it's just going to be so much easier using it through Gmail and Google docs and all that stuff.

We also we also need to acknowledge just how amazing this advertising businesses for Meta. Like this is one of the greatest businesses on planet Earth. $64 billion on just showing people ads and it's growing.

Like I mean it's just incredible how he keeps finding more people to serve this to. And I mean what happens when that gets to 80 90 billion over the coming years and the fre you know the capex eventually comes to an end and all of that just goes down to the bottom line like it's a simple business ads

Yeah, Meta has never been Meta has never been good at being creator focused, but they've been really good at serving ads in between content, even if the creators don't get paid off it, which, you know, creators haven't really benefited the most from Meta and Instagram.

Facebook and Instagram off of monetization, but they have from getting an audience.

Meta crushed it.