Meta Platforms, Inc.METANASDAQ

Overview Intelligence Charts News Fundamentals DCF Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $1,021.60 per share(market-calibrated)

+59.5%

Upside to Fair Value

Current

$640.37

Pure Model

$1,019.48

Fair Value

$1,021.60

Bull Case

$1,505.88

Bear Case

$660.39

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

3.90%

Calibrated Growth

3.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $1,019.48.

What's Driving This Ratingfor META

↓

CapEx normalizing toward maintenance

Historical CapEx is 18.33% of revenue (heavy investment phase). Model fades this to 6.00% by Year 10, freeing up ~$80.0B in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 37.33% — below the sector mature average of 41.44%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $242.2B (37.33% margin).

↑

Strong near-term revenue growth

Analyst consensus projects 24.54% revenue growth in Year 1, fading to 13.34% by Year 5 and 3.75% by Year 10. Revenue reaches $648.9B by Year 10 (vs $201.0B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $628.02/share (17.2x terminal FCF) while exit multiple gives $1,410.93/share (47.1x terminal FCF). The 28x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.75% growth is more conservative. The base case averages both methods.

✓

Model and market roughly agree

Market-implied terminal growth of 3.90% is close to the model's 3.75% (only 15bps apart). The DCF assumptions are well-aligned with how the market is pricing this stock.

→

Moderate cash flow conversion

Year 10 FCF/EBITDA conversion is 59.39% — acceptable but leaves room for improvement. High reinvestment needs consume a meaningful portion of operating cash flow.

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.28

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)10.28%

Cost of Debt

Pre-tax Cost of Debt0.33%

Tax Rate29.64%

After-tax Cost of Debt0.23%

Equity Weight (E/V)95.06%

Debt Weight (D/V)4.94%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (95.06% × 10.28%) + (4.94% × 0.23%)

= 9.78%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$250.3B	$345.3B	$450.9B	$550.1B	$648.9B
EBIT	$93.4B	$128.9B	$168.3B	$205.3B	$242.2B
Tax	$27.7B	$38.2B	$49.9B	$60.9B	$71.8B
NOPAT	$65.7B	$90.7B	$118.4B	$144.5B	$170.4B
+ Depreciation	$15.4B	$21.3B	$27.8B	$33.9B	$40.0B
- Capex	$45.9B	$53.8B	$57.9B	$55.6B	$38.9B
- Δ NWC	$8.1B	$8.0B	$8.7B	$7.9B	$3.9B
Free Cash Flow	$27.1B	$50.1B	$79.5B	$114.9B	$167.6B
Discount Factor	0.911	0.756	0.627	0.520	0.393
Present Value	$24.7B	$37.8B	$49.9B	$59.8B	$65.9B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$167.6B

Terminal Growth Rate3.75%

WACC9.78%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$2.9T

PV of Terminal Value$1.1T

Exit Multiple Method

Year 10 EBITDA$282.2B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$7.9T

PV of Terminal Value$3.1T

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$497.5B

PV of Terminal Value$1.1T

Enterprise Value$1.6T

(-) Net Debt$48.0B

Equity Value$1.6T

Shares Outstanding2.5B

Price per Share$628.02

Exit Multiple Method

PV of Projected FCFs$497.5B

PV of Terminal Value$3.1T

Enterprise Value$3.6T

(-) Net Debt$48.0B

Equity Value$3.6T

Shares Outstanding2.5B

Price per Share$1,410.93

Pure Model Fair Value

$1,019.48

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.75%	3.25%	3.75%	4.25%	4.75%
7.78%	$1,264.32	$1,301.45	$1,347.80	$1,407.27	$1,486.36
8.78%	$1,109.46	$1,132.82	$1,160.81	$1,194.98	$1,237.64
9.78%	$985.64	$1,001.26	$1,019.48	$1,040.98	$1,066.77
10.78%	$883.04	$893.97	$906.46	$920.86	$937.65
11.78%	$795.99	$803.90	$812.81	$822.89	$834.41

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$660.39

3.1% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 1.60

Base Case

$1,019.48

59.2% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 1.28

Bull Case

$1,505.88

135.2% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 1.09

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth24.54%

Year 3 Revenue Growth16.49%

Year 5 Revenue Growth13.34%

Year 7 Revenue Growth9.51%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin37.33%

Terminal EBIT Margin41.44%

Tax Rate29.64%

Historical Capex / Rev18.33%

Terminal Capex / Rev6.00%

NWC / Revenue16.47%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 28x EV/EBITDA (Technology sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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