Wells Fargo analyst Ken Gawrelski said on Monday that when Meta raised its price target, the company finally now has a story to tell. Put that line in the context of the past few months, and it feels a bit ironic. Wall Street’s biggest gripe with Meta is exactly that the money is being spent ever more aggressively, yet it can’t explain which products—ones that would actually get users to pay—will ultimately come out of it. This week, an AI agent called Muse has filled in that blank at least for now, and the stock price has done the “filling in” first.
Meta surged 11.43% in a single day on Monday. On Binance, the $METAB mark is currently around $734, up a bit over 8% over the past 24 hours. Over the weekend and the past few days, the price basically moved sideways—most of the action was concentrated in the U.S. stock market open. This rally was driven by Muse. It launched on September 8 and can help users send emails, schedule appointments, fill out forms, and place orders directly. According to reports from overseas media, in its first few days after launch, Muse’s download count exceeded 730,000, ahead of ChatGPT and Claude. On September 18, it also climbed to No. 1 on the free app chart in the U.S. #Meta #AI agent
To understand this bullish candle, you need to flip back to Meta’s second-quarter earnings report from late July. In that quarter, Meta revenue was $60.8 billion, up 28% year over year—the ad machine kept rolling. The lower half of the income statement looked ugly: net profit was down 14% year over year. Even more striking was the cash flow: capital expenditures nearly wiped out operating cash flow, leaving quarterly free cash flow at under $800 million. Management also raised its full-year capital expenditure guidance to $130 billion to $145 billion, citing rising component prices and the need to build data centers in advance to support future years’ computing capacity. After the earnings were released, the stock fell sharply after-hours.
So for the past two months, the market has been asking the same question: with so much money poured into GPUs and data centers, what exactly do they get back in return? Muse is Meta’s first answer to show a user-driven download decision—something users are willing to go out and install. Earlier, JPMorgan’s Doug Anmuth moved first: on September 10, he upgraded the rating from Neutral to Overweight and raised the price target to $820. His reasoning was that Meta’s self-developed model has already caught up to the first tier, and Muse plus externally open model interfaces could open another revenue line beyond ads. Wells Fargo raised its target to $796 this time, with essentially the same logic.
There are also credible dissenting voices. Oppenheimer’s Jason Helfstein ran the numbers. At a subscription price of $20 per month, Meta would need to accumulate roughly 115 million paid users for Muse to generate about $28 billion in annual revenue. He doesn’t think it will happen in the near term, for three reasons: the paid conversion rate is already low, ChatGPT and Gemini have already taken up space, and users may not necessarily be comfortable handing over all their various account usernames and passwords to Meta.
On Monday, another development also occurred—one that may matter even more than the download chart. Starting Sunday night, Amazon began blocking Muse from outside its own marketplace. Amazon cited several reasons, including that Meta didn’t give advance notice, that Muse doesn’t indicate it is a robot when browsing webpages, and that it appears to capture and save users’ login information. In the past year, Amazon has taken similar actions against shopping agents from Google and OpenAI, and it has even sued Perplexity over similar issues.
My take on this rally has two halves. In the first half, I agree with JPMorgan and Wells Fargo. In July, the market punished Meta for a core reason: capital expenditures didn’t seem to translate into product outcomes. Now the “outcomes” are showing up—users really are downloading—and the biggest hole in the valuation has been filled to some extent. There’s a reason the stock is revising back.
In the second half, I side with Helfstein, and I also think his math is a bit optimistic. The fact that Muse tops the download charts proves curiosity. But curiosity is still separated from revenue by two hurdles: retention and then paid conversion. There are too many examples of AI apps that surge on ranking lists and then quickly cool off. I even think the subscription fee itself isn’t the most crucial thing. The truly valuable position for Meta is the “entry point” that determines what users decide to buy before they buy it. Once that entry point is firmly established, the advertising and shopping-guidance businesses can grow alongside it. Unfortunately, what Amazon blocked is exactly that entry point. An agent can place orders for you, but only if merchants are willing to let it into the door. America’s largest e-commerce platform has already stated it won’t allow it—so Muse’s shopping scenario is missing the biggest piece for now.
There’s also another risk on the ledger. The more popular Muse becomes, the more inference compute must be burned. The situation in the second quarter—where capital expenditures ate up all cash flow—likely will continue through this year as well. This rally is buying the story, but the bill will only line up in later quarters. If Muse’s daily active users clearly drop over the next few weeks, or if free cash flow in the third-quarter earnings report continues to hover around zero, then this upward move won’t be sustainable.
On Thursday morning Beijing time, Zuckerberg will deliver a keynote at the Connect conference. The agenda already includes a dedicated session for Muse Spark, as well as an open-source model called Muse Glimmer aimed at local AI agents. The Information reported that Meta may release an AI glasses product without cameras, but Meta has not confirmed it.
You can look at whether Meta at Connect is willing to disclose Muse retention or daily active usage, and then compare that with the gap between capital expenditures and operating cash flow shown in the third-quarter earnings report at the end of October. The former indicates whether users stick around; the latter indicates how long this “accounting” can hold up.
Meta surged 11.43% in a single day on Monday. On Binance, the $METAB mark is currently around $734, up a bit over 8% over the past 24 hours. Over the weekend and the past few days, the price basically moved sideways—most of the action was concentrated in the U.S. stock market open. This rally was driven by Muse. It launched on September 8 and can help users send emails, schedule appointments, fill out forms, and place orders directly. According to reports from overseas media, in its first few days after launch, Muse’s download count exceeded 730,000, ahead of ChatGPT and Claude. On September 18, it also climbed to No. 1 on the free app chart in the U.S. #Meta #AI agent
To understand this bullish candle, you need to flip back to Meta’s second-quarter earnings report from late July. In that quarter, Meta revenue was $60.8 billion, up 28% year over year—the ad machine kept rolling. The lower half of the income statement looked ugly: net profit was down 14% year over year. Even more striking was the cash flow: capital expenditures nearly wiped out operating cash flow, leaving quarterly free cash flow at under $800 million. Management also raised its full-year capital expenditure guidance to $130 billion to $145 billion, citing rising component prices and the need to build data centers in advance to support future years’ computing capacity. After the earnings were released, the stock fell sharply after-hours.
So for the past two months, the market has been asking the same question: with so much money poured into GPUs and data centers, what exactly do they get back in return? Muse is Meta’s first answer to show a user-driven download decision—something users are willing to go out and install. Earlier, JPMorgan’s Doug Anmuth moved first: on September 10, he upgraded the rating from Neutral to Overweight and raised the price target to $820. His reasoning was that Meta’s self-developed model has already caught up to the first tier, and Muse plus externally open model interfaces could open another revenue line beyond ads. Wells Fargo raised its target to $796 this time, with essentially the same logic.
There are also credible dissenting voices. Oppenheimer’s Jason Helfstein ran the numbers. At a subscription price of $20 per month, Meta would need to accumulate roughly 115 million paid users for Muse to generate about $28 billion in annual revenue. He doesn’t think it will happen in the near term, for three reasons: the paid conversion rate is already low, ChatGPT and Gemini have already taken up space, and users may not necessarily be comfortable handing over all their various account usernames and passwords to Meta.
On Monday, another development also occurred—one that may matter even more than the download chart. Starting Sunday night, Amazon began blocking Muse from outside its own marketplace. Amazon cited several reasons, including that Meta didn’t give advance notice, that Muse doesn’t indicate it is a robot when browsing webpages, and that it appears to capture and save users’ login information. In the past year, Amazon has taken similar actions against shopping agents from Google and OpenAI, and it has even sued Perplexity over similar issues.
My take on this rally has two halves. In the first half, I agree with JPMorgan and Wells Fargo. In July, the market punished Meta for a core reason: capital expenditures didn’t seem to translate into product outcomes. Now the “outcomes” are showing up—users really are downloading—and the biggest hole in the valuation has been filled to some extent. There’s a reason the stock is revising back.
In the second half, I side with Helfstein, and I also think his math is a bit optimistic. The fact that Muse tops the download charts proves curiosity. But curiosity is still separated from revenue by two hurdles: retention and then paid conversion. There are too many examples of AI apps that surge on ranking lists and then quickly cool off. I even think the subscription fee itself isn’t the most crucial thing. The truly valuable position for Meta is the “entry point” that determines what users decide to buy before they buy it. Once that entry point is firmly established, the advertising and shopping-guidance businesses can grow alongside it. Unfortunately, what Amazon blocked is exactly that entry point. An agent can place orders for you, but only if merchants are willing to let it into the door. America’s largest e-commerce platform has already stated it won’t allow it—so Muse’s shopping scenario is missing the biggest piece for now.
There’s also another risk on the ledger. The more popular Muse becomes, the more inference compute must be burned. The situation in the second quarter—where capital expenditures ate up all cash flow—likely will continue through this year as well. This rally is buying the story, but the bill will only line up in later quarters. If Muse’s daily active users clearly drop over the next few weeks, or if free cash flow in the third-quarter earnings report continues to hover around zero, then this upward move won’t be sustainable.
On Thursday morning Beijing time, Zuckerberg will deliver a keynote at the Connect conference. The agenda already includes a dedicated session for Muse Spark, as well as an open-source model called Muse Glimmer aimed at local AI agents. The Information reported that Meta may release an AI glasses product without cameras, but Meta has not confirmed it.
You can look at whether Meta at Connect is willing to disclose Muse retention or daily active usage, and then compare that with the gap between capital expenditures and operating cash flow shown in the third-quarter earnings report at the end of October. The former indicates whether users stick around; the latter indicates how long this “accounting” can hold up.