Our Calculation Of Intrinsic Value: Meta Platforms, Inc.

Each week we run a DCF (Discounted Cash Flow) model on a company from our watchlist. This week’s pick: Meta Platforms, Inc. (META).

Profile

Meta Platforms is one of the world’s largest technology companies, operating a portfolio of social media and communications platforms including Facebook, Instagram, WhatsApp, and Messenger. The company’s platforms connect billions of users worldwide and provide businesses with powerful digital advertising tools to reach targeted audiences.

Advertising remains the primary driver of Meta’s revenue and profitability, supported by its enormous global user base, sophisticated recommendation algorithms, and extensive data infrastructure. The company is also investing heavily in artificial intelligence, data centers, augmented and virtual reality, and next-generation computing platforms.

Meta’s business model is driven by:

• Digital advertising across Facebook and Instagram

• User engagement across its Family of Apps

• AI-powered content recommendations and advertising tools

• Messaging platforms including WhatsApp and Messenger

Meta’s competitive advantages include:

• Billions of users across its global social media platforms

• Powerful network effects across Facebook, Instagram, and WhatsApp

• Highly profitable digital advertising business

• Strong operating cash flow and free cash flow generation

• Significant investment capacity in artificial intelligence and computing infrastructure

The business also benefits from long-term structural tailwinds including continued growth in digital advertising, increasing engagement with short-form video, AI-driven improvements in advertising effectiveness, growing monetization opportunities across messaging, and expanding adoption of artificial intelligence.

DCF Analysis

Inputs:

Discount Rate: 9%

Terminal Growth Rate: 3%

WACC: 9%

Forecasted Free Cash Flows (in billions USD)

2026: $50.0 → PV: $45.9B

2027: $55.0 → PV: $46.3B

2028: $61.0 → PV: $47.1B

2029: $67.0 → PV: $47.5B

2030: $74.0 → PV: $48.1B

Total Present Value of FCFs = ~$234.8B

Terminal Value Calculation

Using the perpetuity growth model with 2030 FCF of $74.0B:

TV = (74.0 × 1.03) ÷ (0.09 − 0.03)

Terminal Value ≈ $1,270B

Present Value of Terminal Value ≈ $826B

Enterprise Value

Enterprise Value = $234.8B + $826B

Enterprise Value ≈ $1,061B

Net Debt Position

Cash & Equivalents: ~$81.6B

Total Debt: ~$83.9B

Net Debt ≈ $2.3B

Equity Value & Per-Share Value

Equity Value = $1,061B − $2.3B

Equity Value ≈ $1,059B

Shares Outstanding: ~2.53B

Intrinsic Value per Share ≈ $418

Conclusion

DCF Value: ~$418

Current Price: ~$545

Margin of Safety: ~-23%

Meta Platforms remains one of the world’s most profitable technology businesses, supported by enormous network effects, billions of users, a highly profitable advertising platform, and significant opportunities from artificial intelligence.

Much of Meta’s quality and long-term growth appears reflected in the current share price. Our conservative DCF produces an intrinsic value of approximately $418 per share, suggesting the stock currently trades above our estimate of fair value and offers a limited margin of safety.