Meta Platforms, Inc. (META) | Investment Case

1. Company Snapshot

1.a. Company Description

Meta Platforms, Inc.engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide.It operates in two segments, Family of Apps and Reality Labs.

The Family of Apps segment offers Facebook, which enables people to share, discuss, discover, and connect with interests; Instagram, a community for sharing photos, videos, and private messages, as well as feed, stories, reels, video, live, and shops; Messenger, a messaging application for people to connect with friends, family, communities, and businesses across platforms and devices through text, audio, and video calls; and WhatsApp, a messaging application that is used by people and businesses to communicate and transact privately.The Reality Labs segment provides augmented and virtual reality related products comprising consumer hardware, software, and content that help people feel connected, anytime, and anywhere.The company was formerly known as Facebook, Inc.

and changed its name to Meta Platforms, Inc.in October 2021.Meta Platforms, Inc.

was incorporated in 2004 and is headquartered in Menlo Park, California.

Show Full description

1.b. Last Insights on META

Meta's recent performance was negatively impacted by increased capital spending plans, particularly in AI, which raised investor concerns about the company's profitability. A $16 billion tax hit also contributed to the decline. Despite strong Q3 revenue growth of 26% year-over-year and expanding cash flow, the company's aggressive investments in AI and research and development spooked investors. Meta's plans to "invest aggressively" in areas like AI and its app ecosystem may be viewed as a threat by some investors. (Source: Meta's Q3 earnings report)

1.c. Company Highlights

Last Price	661.53
Change Percentage	3.43%
Open	676.04
Previous Close	639.6
Market Cap ( Millions)	1667443
Volume	29723064
Year High	796.25
Year Low	479.8
M A 50	678.86
M A 200	671.78

FCF Yield	2.69%
Dividend Yield	0.31%
ROE	30.93%
Debt / Equity	14.86%
Net Debt / EBIDTA	18.23%
Price To Book	8.58
Price Earnings Ratio	28.45
Price To FCF	37.19
Price To sales	8.8
EV / EBITDA	16.48

2. Meta's Q3 2025 Earnings: A Strong Performance Driven by AI Advancements

Meta's Q3 2025 financial performance was robust, with total revenue increasing 26% to $51.2 billion, surpassing expectations. The company's earnings per share (EPS) came in at $7.25, beating analyst estimates of $6.72. The strong revenue growth was largely driven by the company's ads business, which continues to benefit from improvements in AI ranking systems. The annual run rate of ads through end-to-end AI-powered tools has now passed $60 billion, a testament to the effectiveness of Meta's AI-driven advertising solutions.

Publication Date: Oct -31

                                    📋 Highlights
                                    Surpassing User Engagement Milestones::
                                                3.5 billion daily active users across apps, Instagram hits 3 billion monthly actives, and Threads exceeds 150 million daily actives.
AI-Driven Revenue Growth::
                                                Ads business achieves $60 billion annual run rate via AI tools, with Reels contributing over $50 billion and Threads seeing 10% higher engagement.
Financial Performance::
                                                Q3 revenue jumps 26% to $51.2 billion, but expenses climb 32% to $44.4 billion in cash reserves, offset by $28.8 billion in debt.
Future Guidance & Investment::
                                                Projects Q4 revenue of $56–59 billion, 2025 full-year expenses of $116–118 billion, and $70–72 billion in 2026 CapEx for infrastructure expansion.

                                

Revenue Growth and Ad Performance

The company's ad performance was a significant contributor to its revenue growth, with Click-to-WhatsApp ads growing revenue 60% year-over-year in Q3. Meta's AI recommendation systems delivered higher-quality content, leading to 5% more time spent on Facebook and 10% on Threads. The company's focus on advancing recommendation systems across Facebook, Instagram, and WhatsApp is expected to continue driving engagement and revenue growth.

Expense Growth and Capital Allocation

Expenses grew 32% year-over-year, driven by legal-related expenses, employee compensation, and infrastructure costs. Meta's capital allocation strategy is focused on deploying capital to support the company's highest-order priorities, including developing leading AI products and business solutions. The company expects to make a significantly larger investment in infrastructure to meet its capacity needs in 2026, which will likely result in faster expense growth.

Valuation and Outlook

Meta's current valuation metrics indicate a Price-to-Earnings (P/E) Ratio of 28.66 and a Price-to-Sales (P/S) Ratio of 8.84. Analysts estimate next year's revenue growth at 17.7%. Given the company's strong performance and growth prospects, its current valuation appears reasonable. Meta's ability to drive growth and innovation through AI advancements is expected to continue delivering value to shareholders. The company's guidance for Q4 2025 total revenue, expected to be in the range of $56 billion to $59 billion, reflects continued strong ad revenue growth.

Future Prospects

Meta's focus on AI and recommendation systems is expected to drive future growth, with the company poised to capitalize on new revenue opportunities in the years to come. As Mark Zuckerberg noted, "We're focused on training the next generation of work and doing novel work at Meta Superintelligence Labs. These models will improve engagement, advertising, and monetization." The company's commitment to investing in AI research and development is likely to yield long-term benefits.

3. NewsRoom

Meta Combines Facebook and Instagram Support Into a Single Hub

00:56

Source: cnet.com

Apple appoints Meta's Newstead as general counsel amid executive changes

Dec -04

Source: reuters.com

Market Today: WBD Sale Bids, Meta Cuts, Apple Shake-Up

Dec -04

Source: gurufocus.com

VR has been 'pretty big disappointment' for Meta, says Mizuho's Lloyd Walmsley

Dec -04

Source: youtube.com

Meta Plans to Shift Spending Away From the Metaverse

Dec -04

Source: wsj.com

Is Zuckerberg Giving Up on the Metaverse?

Dec -04

Source: youtube.com

Dow Jones Today: Major Stock Indexes Little Changed; Weekly Jobless Claims Unexpectedly Fall; Inflation Data on Tap Tomorrow

Dec -04

Source: investopedia.com

Meta's Metaverse Cuts Not Surprising: EMARKETER's Smiley

Dec -04

Source: youtube.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (13.49%)

6. Segments

Family of Apps

Expected Growth: 13.4%

Growing demand for digital advertising, increasing user engagement on Meta's suite of social media applications, and expansion into new markets drive growth.

Reality Labs

Expected Growth: 20.5%

Virtual reality products are poised for growth driven by increasing adoption in gaming and enterprise sectors. Meta Platform's investment in Reality Labs will further boost innovation, leading to increased market share and revenue growth.

7. Detailed Products

Facebook

A social networking platform that allows users to connect with friends, family, and other people who share similar interests.

Instagram

A photo and video-sharing social networking platform that allows users to share content and engage with others.

A messaging app that allows users to send messages, make voice and video calls, and share media.

Messenger

A messaging platform that allows users to communicate with friends and businesses.

Oculus

A virtual reality technology company that develops and manufactures VR hardware and software.

Workplace

A platform that allows teams to collaborate and communicate through groups, messaging, and video conferencing.

Portal

A series of smart display devices that allow users to make video calls, control smart home devices, and access information.

Facebook Marketplace

A platform that allows users to buy and sell goods and services within their local communities.

Facebook Dating

A dating platform that allows users to create a dating profile, match with others, and engage in conversations.

8. Meta Platforms, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Meta Platforms, Inc. has a medium threat of substitutes due to the presence of alternative social media platforms and online advertising channels. However, the company's strong brand recognition and large user base mitigate this threat to some extent.

Bargaining Power Of Customers

Meta Platforms, Inc. has a low bargaining power of customers due to its dominant position in the social media and online advertising markets. The company's large user base and diversified revenue streams reduce the bargaining power of individual customers.

Bargaining Power Of Suppliers

Meta Platforms, Inc. has a low bargaining power of suppliers due to its significant scale and negotiating power. The company's large advertising revenue and diversified supplier base reduce the bargaining power of individual suppliers.

Threat Of New Entrants

Meta Platforms, Inc. has a low threat of new entrants due to the high barriers to entry in the social media and online advertising markets. The company's strong brand recognition, large user base, and significant investments in technology and infrastructure make it difficult for new entrants to compete.

Intensity Of Rivalry

Meta Platforms, Inc. operates in a highly competitive industry with intense rivalry among established players. The company faces significant competition from other social media platforms, online advertising companies, and emerging technologies.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	19.56%
Debt Cost	3.95%
Equity Weight	80.44%
Equity Cost	9.97%
WACC	8.79%
Leverage	24.31%

11. Quality Control: Meta Platforms, Inc. passed 8 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

AT&T

A-Score: 7.0/10

Value: 7.1

Growth: 2.6

Quality: 5.7

Yield: 9.0

Momentum: 8.5

Volatility: 9.3

1-Year Total Return ->

Alphabet

A-Score: 5.9/10

Value: 1.8

Growth: 8.3

Quality: 8.4

Yield: 0.0

Momentum: 9.0

Volatility: 7.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

12.89%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.79%

Meta Platforms, Inc. - US30303M1027

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on META

1.c. Company Highlights

Better Quality

Higher Growth

Expensive

Earnings Beats

Revenues Beats

2. Meta's Q3 2025 Earnings: A Strong Performance Driven by AI Advancements

Revenue Growth and Ad Performance

Expense Growth and Capital Allocation

Valuation and Outlook

Future Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (13.49%)

6. Segments

Family of Apps

Expected Growth: 13.4%

Reality Labs

Expected Growth: 20.5%

7. Detailed Products

Facebook

Instagram

WhatsApp

Messenger

Oculus

Workplace

Portal

Facebook Marketplace

Facebook Dating

8. Meta Platforms, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Meta Platforms, Inc. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

661.53$

Current Price

661.53$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA