Topic 7.4: Case Study: Analyzing a Modern Value Opportunity

Case Study: Analyzing a Modern Value Opportunity

Welcome back to the University.

In our last session, we traveled back to 1963 to witness a master at work. The American Express "Salad Oil Scandal" taught us how a temporary, isolated crisis can create a generational buying opportunity. But that was an era of tangible assets. Does value investing still work in the intangible, fast-paced world of technology?

Let's fast forward to late 2022. Meta Platforms, the undisputed king of social media, is on its knees. The stock has been eviscerated, collapsing over 70% from its peak in a brutal, relentless sell-off. Wall Street has declared the business model broken. A "perfect storm" of negative headlines batters the company daily: Apple's privacy changes have crippled its ad business, TikTok is stealing the next generation, and Mark Zuckerberg is incinerating billions of dollars on a bizarre, legless Metaverse fantasy.

The consensus was deafening: SELL. The narrative was that Meta's best days were over. The moat was breached. The magic was gone.

But what if the consensus was wrong? What if, hidden beneath the rubble of a collapsed stock price and buried under an avalanche of negative headlines, lay one of the most profitable businesses on planet earth, trading for a price that bordered on the absurd? What if the market was making a colossal, emotional mistake?

A small group of contrarian investors looked past the panic and saw a stunning opportunity. They understood that the key to unlocking this value was hidden in a single table within the company's 10-K report—a table that revealed the entire negative narrative was a grand illusion. We are about to show you that table and break down the exact, step-by-step analysis that turned fear into a fortune.