Bill Ackman calls Meta 'incredibly undervalued,' says it can afford AI spending

Pershing Square CEO Bill Ackman defended Meta Platforms’ (META) spending plans, pointing to its strong balance sheet and accelerating business growth as reasons he considers the stock “incredibly undervalued.”

Ackman said Meta (META) has the financial capacity to fund its investments, citing its $80B cash balance and lack of net leverage.

“Meta has an incredibly strong balance sheet. They've got $80 billion of cash on the balance sheet. They have no net leverage,” Ackman said.

He also pushed back against the significance of Meta’s (META) post-earnings share-price decline, arguing that short-term trading and leveraged market participants can drive sharp moves immediately after results.

“I think we're in a world in which you cannot look at the day one trading of a stock after earnings because of how levered market participants are and how short-term they are,” he said.

Ackman illustrated the volatility by describing how Meta’s share price changed during a flight. “The stock was up when I went to sleep on the flight; it was up something like 5%, and when I checked in before this interview, it was down 6.5%.”

He said the share-price move did not change his view of the business, pointing to AI as a factor helping accelerate growth.

“This is a business that is accelerating. They've proven that AI is helping them accelerate their business, and this remains an incredibly undervalued stock, and that's why we own it,” he added.