Bullbear Buffett : A summary and discussion of Meta’s income statements

Friday, 5 June 2026

A summary and discussion of Meta’s income statements

A summary and discussion of Meta’s five‑year annual income statements (2021–2025) and the latest five quarterly statements (Q1 2025 – Q1 2026).

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### Five‑Year Annual Summary (2021–2025)

Over the past five years, Meta has delivered strong top‑line growth with revenue rising from $117.9 billion in 2021 to $200.9 billion in 2025, representing a compound annual growth rate of approximately 14%. After a slight revenue decline of 1.1% in 2022, growth re‑accelerated to 15.7% in 2023, 21.9% in 2024, and 22.2% in 2025, indicating a robust recovery driven by stronger advertising demand and improved monetization. Gross profit margin improved steadily from around 80% in 2021 to 82% in 2025, reflecting efficient cost of goods sold management. However, operating expenses – particularly research and development – grew dramatically; R&D spending more than doubled from $24.7 billion to $57.4 billion over the five years, as Meta invested heavily in artificial intelligence, data center infrastructure, and the metaverse. Selling, general and administrative expenses also increased but at a more moderate pace. Earnings before interest and taxes (EBIT) grew from $46.8 billion in 2021 to $83.3 billion in 2025, though 2022 was a weak year due to $4.6 billion in unusual expenses. Net income showed volatility: it fell to $23.2 billion in 2022, rebounded to $39.1 billion in 2023 and $62.4 billion in 2024, then declined slightly to $60.5 billion in 2025 – a 3% drop despite the 22% revenue increase. This anomaly is almost entirely explained by a surge in income tax expense to $25.5 billion in 2025 from $8.3 billion in 2024, driven by a large deferred domestic tax charge of $18.8 billion, which appears to be a non‑cash, one‑time item. Consequently, diluted earnings per share followed a similar pattern: $13.77 in 2021, $8.59 in 2022, $14.87 in 2023, $23.86 in 2024, and $23.49 in 2025. Depreciation and amortization expense more than doubled over the period, reaching $18.6 billion in 2025, consistent with Meta’s heavy capital expenditure on servers and facilities. Overall, the annual data show a company with powerful revenue momentum and stable gross margins, but with reported net income increasingly distorted by tax accounting and high investment spending.

### Latest Five Quarters (Q1 2025 – Q1 2026)

The quarterly data provide a more granular view of Meta’s recent performance and reveal significant volatility in net income driven almost entirely by tax items. Revenue grew sequentially from $42.3 billion in Q1 2025 to $59.9 billion in Q4 2025, a typical seasonal pattern with a strong holiday quarter, then declined 6% to $56.3 billion in Q1 2026 – though on a year‑over‑year basis Q1 2026 revenue was 33% higher than Q1 2025, indicating continued robust growth. Gross margin remained consistently around 82% throughout the five quarters. Operating earnings before interest, taxes, depreciation, and amortization (EBITDA) showed steady improvement, rising from $21.5 billion in Q1 2025 to $30.2 billion in Q4 2025, then easing slightly to $28.9 billion in Q1 2026 in line with the seasonal revenue dip. However, reported net income was highly erratic: Q1 2025 net income was $16.6 billion, Q2 2025 $18.3 billion, Q3 2025 plunged to just $2.7 billion, Q4 2025 rebounded to $22.8 billion, and Q1 2026 surged to $26.8 billion. The Q3 2025 collapse was not due to operational weakness – revenue was $51.2 billion and EBITDA was $25.5 billion – but rather an enormous income tax expense of $19.0 billion, likely a one‑time deferred tax charge or settlement. Conversely, Q1 2026 net income received a tax benefit of negative $5.0 billion, artificially boosting the bottom line. Interest expense grew from $240 million in Q1 2025 to $562 million in Q1 2026, reflecting higher debt or interest rates, and an unusual expense of $1.4 billion appeared in Q1 2026, possibly for restructuring or legal matters. In summary, the quarterly statements confirm that Meta’s core operations remain exceptionally healthy – revenue growth is accelerating, EBITDA is strong and stable, and gross margins are best‑in‑class – but reported net income has become a misleading metric due to large, non‑recurring tax adjustments. Investors and analysts are better served by focusing on revenue, EBITDA, and free cash flow to assess the underlying business momentum.

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My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?

Bullbear Buffett

Friday, 5 June 2026

A summary and discussion of Meta’s income statements

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All equity security investments present a risk of loss of capital

The Ultimate Hold-versus-Sell Test

Some thoughts on Analysing Stocks (KISS)

Benjamin Graham

Sell the losers, let the winners run.

Investment Style

Warren Buffett

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