Meta is the world’s largest online social network, with nearly 4 billion family of apps monthly active users. Users engage with each other in different ways, exchanging messages and sharing news events, photos, and videos. The firm’s ecosystem consists mainly of the Facebook app, Instagram, Messenger, WhatsApp, and many features surrounding these products. Users can access Facebook on mobile devices and desktops. Advertising revenue represents more than 90% of the firm’s total revenue, with more than 45% coming from the US and Canada and over 20% from Europe.

We are raising our 2Q24 GDP forecast to 1.9% from 1.5% and are reducing our full-year 2024 GDP forecast to 1.8% from 2%. The U.S. economy is chugging along, but persistent inflation is delaying the interest-rate relief that many consumers need to finance home renovations and other big-ticket purchases, such as furniture and automobiles. We saw evidence of this in last week's advance estimate of first-quarter GDP released by the Bureau of Economic Analysis. U.S. GDP expanded in 1Q at an annualized rate of 1.6%. That was well below the 2.5% consensus and 3.4% growth in the fourth quarter of 2023. As we discussed in our April webinar, the all-important consumer economy is "mixed," but it is still driving the train. Consumer spending, designated as Personal Consumption Expenditures (PCE) in the GDP report, contributed 1.68 points of the 1.6% growth in 1Q (offset by lower inventory investment and the trade deficit). PCE grew 2.5%, but the consumer category was carried by the huge services component, which was up 4.0%. Consumer spending on goods declined 0.4%, which should worry the Fed. Within goods, nondurables were flat but durables were down 1.2%. Our 3Q GDP estimate remains at 1.8%. Our 4Q estimate is now 2.0% down from 2.3%. One potential headwind to our 4Q estimate is that the Purchasing Managers Index for services (reported last Friday) came in at a contractionary 49.4 in April, ending a run of 15 months above 50. Our forecast is for GDP to grow 2.0% in 2025, with an acceleration to 2.3% in the second half of the year. One concern is that the one-percentage-point drop in the 10-year Treasury yield at the end of 2023 likely stoked growth in 4Q23 and 1Q24. The benchmark's 70-basis-point yield increase in 1Q could slow the train in 3Q and 4Q, particularly with the yield curve still inverted. While economic growth may be uneven in 2024 and 2025, we believe the Fed has the ability to bolster growth if needed.

Netflix’s relatively simple business model involves only one business, its streaming service. It has the biggest television entertainment subscriber base in both the United States and the collective international market, with almost 250 million subscribers globally. Netflix has exposure to nearly the entire global population outside of China. The firm has traditionally avoided live programming or sports content, instead focusing on on-demand access to episodic television, movies, and documentaries. The firm recently began introducing ad-supported subscription plans, giving the firm exposure to the advertising market in addition to the subscription fees that have historically accounted for nearly all its revenue.

Netflix’s relatively simple business model involves only one business, its streaming service. It has the biggest television entertainment subscriber base in both the United States and the collective international market, with almost 250 million subscribers globally. Netflix has exposure to nearly the entire global population outside of China. The firm has traditionally avoided live programming or sports content, instead focusing on on-demand access to episodic television, movies, and documentaries. The firm recently began introducing ad-supported subscription plans, giving the firm exposure to the advertising market in addition to the subscription fees that have historically accounted for nearly all its revenue.