DCF Studio

    META · NMS · Communication Services

    Meta Platforms, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 439.89

    Market price

    USD 665.75

    Implied upside

    -33.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedCapital expenditure runs at 26.0% of revenue against depreciation of 8.6%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 439.89-33.9%
    Exit multiple
    USD 955.95+43.6%
    Market price
    USD 665.75

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn31bn61bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 240.9bnUSD 288.9bnUSD 346.3bnUSD 415.3bnUSD 497.9bn+19.9%
    EBITUSD 86.2bnUSD 103.3bnUSD 123.9bnUSD 148.5bnUSD 178.1bn+19.9%
    NOPATUSD 70.2bnUSD 84.2bnUSD 100.9bnUSD 121.0bnUSD 145.1bn+19.9%
    Add depreciation & amortisationUSD 20.7bnUSD 24.9bnUSD 29.8bnUSD 35.7bnUSD 42.8bn+19.9%
    Less capital expenditureUSD -62.7bnUSD -75.2bnUSD -90.2bnUSD -108.1bnUSD -129.6bn+19.9%
    Less increase in working capitalUSD 1.4bnUSD 1.7bnUSD 2.0bnUSD 2.4bnUSD 2.9bn-19.9%
    Free cashflow to firmUSD 29.7bnUSD 35.6bnUSD 42.6bnUSD 51.1bnUSD 61.3bn+19.9%
    Discount factor0.94900.85450.76950.69300.6240-
    Present valueUSD 28.1bnUSD 30.4bnUSD 32.8bnUSD 35.4bnUSD 38.2bn+8.0%
    Present Value Of The ForecastUSD 165.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.163Reported 1.243, pulled toward 1.0 (Blume)
    Cost of equity11.39%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 1696.0bn95.3% of capital
    Total debtUSD 83.9bn4.7% of capital, book value as a proxy
    Tax rate18.5%Effective, capped at statutory
    WACC11.05%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 439.89

    85% of EV

    Forecast FCFF, final year
    USD 61.3bn
    Capex at depreciation, working capital in reinvestment
    USD 145.1bn
    Less reinvestment at g/ROIC (10.7% of NOPAT)
    USD -15.5bn
    Capitalised
    USD 129.6bn
    ROIC (reported)
    23.4%
    Terminal value, undiscounted
    USD 1553.8bn
    Terminal value, discounted
    USD 969.6bn
    Enterprise value
    USD 1134.6bn
    Less net debt
    USD 2.3bn
    Equity value
    USD 1132.3bn

    Exit at 16.7x EBITDA

    Value per shareUSD 955.95

    93% of EV

    Terminal value, undiscounted
    USD 3682.5bn
    Terminal value, discounted
    USD 2298.0bn
    Enterprise value
    USD 2462.9bn
    Less net debt
    USD 2.3bn
    Equity value
    USD 2460.6bn

    Spread between methods: 74%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.05%546.77571.58600.05633.09671.93
    10.05%471.88489.38509.09531.49557.18
    11.05%413.14425.82439.90455.63473.35
    12.05%365.94375.32385.61396.95409.54
    13.05%327.26334.31341.96350.31359.46

    Outlined: this model. Green text: above today's price of 665.75. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year19.9%30.7%+10.8pp
    EBIT margin35.8%51.1%+15.3pp
    Discount rate11.0%8.5%-2.6pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.