February 7th, 2022 | 13:22 CET
Meta, Desert Gold, Amazon: Of good and bad growth
Table of contents:
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
Meta: Where did the Facebook parent take a wrong turn?
When Facebook parent company Meta published quarterly figures a few days ago, the market reacted promptly, sending the stock down around 20%. The reason: Facebook had lost customers, the figures were not as good as some had expected, and the outlook for the future did not convince market observers either. Above all, Meta's big bet, the Metaverse, is increasingly being viewed critically by investors.
Meta founder Mark Zuckerberg wants to take off in the future with a virtual parallel world, the Metaverse. In it, Meta wants to bundle all services and offer users a completely new experience. But it remains to be seen whether customers will want to use the Metaverse. Although Facebook remains a powerful company that can always turn the tide with skillful investments, the example shows impressively that visions are not enough to create a share price fantasy. Especially not in the current uncertain times.
Growth with a plan and a mind: Desert Gold
While many startups seek their salvation in the Metaverse and thus enter completely new territory, Desert Gold pursues a proven concept with its SMSZ project in Mali: discovering gold deposits, identifying them, and demonstrating their economic extraction. Just recently, Desert Gold drilled 1.84 g/t gold over a distance of 30m. Even before that, the Company had announced an initial resource estimate of more than 1 million ounces of gold. According to the Company, the property's potential, characterized by 440 sq km with more than 20 exploration zones and proximity to several already producing mines, is far from exhausted.
The research portal researchanalyst.com stated immediately after the announcement of the resource estimate at the beginning of the year that the market had not sufficiently noticed the share. "From the progress not honored by the stock market, good investment opportunities arise for forward-looking investors. The list of why the stock is a high-opportunity investment is long. The first determined resource of 1 million ounces of gold is an important milestone given the size of the project of 440 sq km and more than 20 zones of gold mineralization. However - there are many more milestones to follow that should underpin the potential for the SMSZ project to produce one or more Tier 1 mines, such as those that already exist in close geographic proximity. With further project progress, the Company is increasingly a takeover candidate," according to market experts at researchanalyst.com. While the growth fantasy at the ex-Facebook Meta relates to the Metaverse, of which only a handful of nerds know anything so far, Desert Gold is pursuing a clear growth plan with no frills. Investors can note the value - in the event of rising gold prices, Desert Gold should offer handsome leverage to the precious metal.
Amazon: This is where the ruble rolls
While Meta thinks in other spheres and has thus far only been moderately successful, Amazon is successfully on a middle path. The Company recently increased its profits strongly and wants to raise the prices for its Prime offer. The stock market is happy about this, and the share price is rising significantly. In an initial reaction, analysts at Goldman Sachs raised their price target to USD 4,200 per share - the stock is currently trading at around USD 3,100. While Meta has to think about completely different things because of the weakness of classic social networks, Amazon sticks to its bread-and-butter business and adds technology where it fits. This hybrid model of retailer and technology group has proven its worth and should continue to offer opportunities in the future. However, for the stock market, Amazon is increasingly seen as a conservative investment. The trees do not grow to the sky for the retail giant, even though the growth perspective fits.
Growth is not out per se. The market is just looking closely at which growth stories are risky and which are not. Amazon's stock belongs to the latter group. Shopping in real life will always be the order of the day - we won't get our fill in the Metaverse. The same applies to the growth story of Desert Gold: The reserve currency will always be in demand. The Canadian Company provides everything to report more and more ounces of the precious metal over time and thus justify steadily higher valuations.
Conflict of interest
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