Meta Platforms Valuation Model

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Overview

Meta Platforms trades at a P/E of around 27 with a market capitalization of $1.9 trillion (Yahoo Finance).
It has a net cash of $18 billion, no short-term debt and long-term debt of $29 billion (which starts maturing from 2027): Stable balance sheet and cash flow generation
It’s guiding CapEx of $66–$72 billion in 2025 and managements commentary indicate that CapEx should rise significantly again in 2026: Declining cash flow generation due to rising Capex
Management guides 2025 OpEx at $114-118 billion, with significant growth expected in 2026 driven by depreciation costs and stock-based compensation: Declining cash flow generation due to rising Capex </aside>

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Investor Takeaway

Meta’s strong revenue and earnings growth, supported by leadership in digital ads and AI, underpins long-term value creation. However, rising CapEx and OpEx may limit share price upside. </aside>

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Prediction

Revenue estimates: $195.6 billion in 2025 (+19% y/y), $228.9 billion in 2026 (+17%) and $263 billion in 2027 (+15%).
EPS estimates: $29.01 in 2025, $31.74 in 2026 and $34.97 in 2027.
Price target: $900 in one year time.
Capex: $69 billion in 2025, $95 billion in 2026, $105 billion in 2027.
Opex: $113.8 billion in 2025, $134.4 billion in 2026, $158.7 billion in 2027. </aside>

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Key Strengths

Meta is evaluated cheaply based on operating cashflows (Sheets), currently P/OCF of 14.
Continued strong growth in digital advertising market: Meta Platforms Market
Continued market share gain due to improvements in its AI ad algorithm and user engagement in Instagram: Meta Platforms ad tools keep getting efficient | Meta Platforms user engagement continues improving </aside>

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Key Downsides

Rising CapEx reduces free cash flow available for buybacks and may force Meta to increase debt levels.
Growing AI talent war increases stock-based compensation and hiring costs, making operating expenses stay elevated: Meta AI Talent War & Super intelligence Lab </aside>