Can you do a META dcf model?

### 🚦 Conclusion Our base-case discounted cash-flow (DCF) model for Meta Platforms (META.O) produces an intrinsic value of **≈ $531 per share**, about **24 % below** the current market price of ~$695.21. Under the assumptions detailed below, the stock screens as **modestly over-valued**, though the gap could close if free-cash-flow (FCF) growth or the terminal multiple proves higher than our conservative inputs. --- ## 🔍 Key Modeling Assumptions | Item | Base-Case Input | Source / Rationale | |------|-----------------|--------------------| | Trailing-12-month FCF | $52 bn (rounded) | Sum of the last four reported quarters’ FCF | | Explicit-period FCF growth | 12 % CAGR (yrs 1-5) | Below the 20-23 % historical rebound post-2022 trough to reflect maturing ad market | | Terminal growth (g) | 3 % | Long-run nominal U.S. GDP proxy | | Discount rate (WACC) | 8.8 % | CAPM cost of equity (β = 1, rf = 4 %, ERP = 5 %) + minimal after-tax cost of debt | | Net debt | $16.83 bn | 2025Q2 balance-sheet data | | Shares outstanding | 2.51 bn | 2025Q2 diluted share count | --- ## 🧮 DCF Walk-Through 1. **FCF Forecast (USD bn)** • Yr 1: 52 × 1.12 = 58.2 • Yr 2: 65.2 • Yr 3: 73.1 • Yr 4: 81.8 • Yr 5: 91.6 2. **Present Value of Explicit FCF (PV)** Discount each year at 8.8 % → **$284 bn** 3. **Terminal Value (TV)** TV = FCF₆ / (WACC − g) = 94.4 / 0.058 = $1 627 bn PV(TV) = 1 064 bn 4. **Enterprise Value (EV)** EV = PV(Explicit) + PV(TV) = **$1 348 bn** 5. **Equity Value** Equity = EV − Net Debt = 1 348 − 16.8 = **$1 331 bn** 6. **Intrinsic Price / Share** 1 331 ÷ 2.51 = **≈ $531** --- ## 🎯 Sensitivity Analysis | WACC ↓ / g → | 2.5 % | 3.0 % | 3.5 % | |--------------|-------|-------|-------| | **7.8 %** | $695 | $760 | $838 | | **8.8 %** | $489 | **$531** | $582 | | **9.8 %** | $374 | $409 | $451 | *Take-away:* a 100 bp drop in WACC or a 50 bp bump in terminal growth pushes fair value back toward (or even above) today’s price. --- ## 📌 What Could Move the Needle • **AI monetisation pace:** faster Reels/Threads ad ramp or successful Llama-based offerings would boost near-term FCF growth. • **CapEx discipline:** Reality Labs burn remains the key swing factor; sharper capital efficiency would raise free cash flow margins. • **Regulatory overhang:** adverse EU or U.S. rulings could compress multiples or add cost. --- ## 📝 Bottom Line Meta is an advertising powerhouse with enviable cash generation, but our DCF suggests the market already prices in robust growth and margin expansion. Long-term investors should **demand continued execution in AI and cost control** before chasing the stock at ~$700. Conversely, any pullback toward the low-$500s could present a more attractive entry point. As always, **stress-test your own assumptions**—small tweaks to growth or discount rate have an outsized impact on value. 📊🤓 --- : FinQuery – Free Cash Flow for META, quarters 2023-12-31 to 2024-12-31. : FinQuery – Beta = 1, Shares = 2.51 bn, Net Debt = $16.83 bn, as of 2025-07-30.