In the ever-evolving world of high finance, even the wealthiest investors occasionally shuffle their portfolios, making moves that leave the rest of us scratching our heads. Recently, a curious trend has emerged. Some billionaires are selling off shares of Meta Platforms (NASDAQ:META). Meanwhile, others are setting their sights on Canada’s own Kinaxis (TSX:KXS). At first glance, it seems like an unusual swap. Why trade out of a dominant tech giant in the social media and artificial intelligence (AI) space for a mid-cap software company specializing in supply chain management? But when you dig into the numbers and the market trends, it starts to make sense.
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Why not Meta?
Meta stock, the company behind Facebook, Instagram, and WhatsApp, has been a staple in billionaire portfolios for years. The tech giant has enjoyed a meteoric rise in valuation, reporting impressive growth figures quarter after quarter. In its most recent earnings, Meta reported revenue of US$48.39 billion for the fourth quarter (Q4) of 2024, up 21% year over year. Meanwhile, earnings per share (EPS) soared to $8.02 from $5.33 in the same quarter last year. The company’s advertising business continues to thrive, bolstered by its aggressive push into AI-powered ad targeting. In fact, daily active users across its platforms reached 3.35 billion in December 2024, a 5% increase from the previous year. There’s no question that Meta stock remains a dominant force in the tech world.
Despite these strong numbers, some investors have been offloading Meta shares. One reason is the increasing regulatory pressure and legal challenges the company faces. Recently, Meta stock reached a legal settlement with former U.S. president Donald Trump over his suspension from the platform. Adding yet another complication to its already complex relationship with governments worldwide. At the same time, its Reality Labs division, which focuses on virtual and augmented reality, continues to lose billions. While Meta stock’s push into the metaverse was once hailed as the future of the internet, it has yet to generate significant returns, leaving many investors skeptical about its long-term profitability.
Head to Kinaxis
Meanwhile, in Canada, Kinaxis has been quietly but steadily gaining traction among institutional investors. While it lacks the flashy brand recognition of Meta stock, Kinaxis has carved out a lucrative niche in the enterprise software market. The company provides cloud-based supply chain management solutions to major corporations, helping them navigate global logistics, demand forecasting, and inventory planning.
Kinaxis’s most recent earnings reflect its growing importance. In Q3 2024, the company reported a total revenue of $121.5 million, a 12% increase year over year. More notably, its Software as a Service (SaaS) revenue climbed 16% to $78.6 million. Unlike Meta stock, which relies heavily on advertising, Kinaxis operates on a subscription-based model that provides consistent, recurring revenue. With adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin that remains strong, the company demonstrates its ability to grow efficiently while maintaining profitability.
Growth versus risk
So why are some billionaire investors shifting their attention from Meta stock to Kinaxis? For one, it’s a classic case of looking for stability and growth potential in an uncertain market. Meta’s valuation, despite its strong earnings, remains highly sensitive to changes in advertising trends and regulatory risks. The company is trading at a trailing price-to-earnings (P/E) ratio of 30.4, which is reasonable for a high-growth stock but still leaves little room for error. Kinaxis, however, offers a different kind of appeal. Steady, predictable revenue in a business segment that’s critical to global commerce.
Another factor at play is the broader shift toward enterprise software. While consumer-facing tech companies like Meta stock are constantly battling user growth concerns, shifting engagement patterns, and ad market volatility, companies like Kinaxis benefit from long-term corporate contracts.
None of this means Meta stock is a bad investment — far from it. The company continues to generate immense cash flow and remains at the forefront of AI and social media. But for those looking for a compelling alternative, Kinaxis offers steady, subscription-based revenue, a crucial role in global business operations, and a valuation that still leaves room for significant growth. The fact that some of the world’s savviest investors are making the switch suggests that Kinaxis may be one of the TSX’s best-kept secrets, at least for now.
