Image Source: Pixabay
 

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 the world’s leading social technology company, operating a family of apps including Facebook, Instagram, WhatsApp, and Messenger, alongside its emerging virtual and augmented reality ecosystem under Reality Labs. With over 3 billion users across its platforms, Meta continues to dominate global digital advertising, while investing heavily in AI-driven engagement, short-form video monetization, and metaverse infrastructure.
Over the past few years, Meta has shifted focus from pure user growth to efficiency, automation, and profitability. CEO Mark Zuckerberg’s “year of efficiency” delivered record margins and free cash flow, even as the company continued to allocate billions to long-term bets in AI and virtual reality. The combination of high operating leverage, strong balance sheet, and expanding ad monetization gives Meta one of the most durable economic moats in the digital ecosystem.
 

DCF Analysis

Inputs:

Discount Rate: 10%

Terminal Growth Rate: 3%

WACC: 10%

Forecasted Free Cash Flows (in billions USD)

2025: $52.0 → PV: $47.3

2026: $55.0 → PV: $45.5

2027: $58.0 → PV: $43.7

2028: $61.0 → PV: $42.0

2029: $64.0 → PV: $40.4

Total Present Value of FCFs = $218.9B

Terminal Value Calculation

Using perpetuity growth model with 2029 FCF = $64B:

TV = (64 × 1.03) ÷ (0.10 − 0.03) = $943.4B

Present Value of Terminal Value = $595.0B

Enterprise Value

Enterprise Value = 218.9B + 595.0B = $813.9B

Net Debt

Cash & Equivalents: $77.8B

Total Debt: $49.0B

Net Debt = –$28.8B (Net Cash Position)

Equity Value & Per-Share Value

Equity Value = 813.9B + 28.8B = $842.7B

Shares Outstanding: ~2.53B

Intrinsic Value per Share ≈ $333
 

Conclusion

DCF Value: $333

Current Price: ~$667

Margin of Safety: –50%

Meta Platforms continues to be an exceptional digital cash generator with dominant network effects, a fortress balance sheet, and accelerating AI-driven monetization. However, under conservative assumptions, the shares trade well above intrinsic value. The market appears to be pricing in sustained double-digit growth and further operating leverage beyond the near term. For long-term investors, META remains a premier compounder — but not a deep-value opportunity at current levels.

More By This Author:

Why Small Caps Are Poised For A Multi-Year Comeback
Tesla, Inc. Q3 2025: Revenue Up 12%, Free Cash Flow Hits New Record
Why Abercrombie & Fitch Could Be One Of The Market’s Deepest Value Plays