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I've been eyeing Meta recently. I know it's not a biotech with a $200M market cap and it's not rocketing, but I think it has potential, even if it's been slow lately.
First of all, what does Meta do? We all know it for its social media (IG, Facebook, WhatsApp, Messenger, and Threads), which have an incredible 3.5 billion users daily. It's practically a monopoly, but officially it hasn't been deemed such, so we're safe.
They generate incredible cash flow and advertise themselves, but we'll see about that later. Furthermore, even if it seems like Meta has fallen behind in certain hot sectors, that's not the case. They've actually launched into AI development (Meta AI, the one integrated into their platforms, which may seem behind but has 1 billion downloads), AR, and VR with products like Meta Quest and the new Ray-Ban sunglasses.
But let's take a step back: how does Meta make money? How does it spend? Debt? Cash? Let's analyze the Q3 2025 balance sheet
Total revenue: $51.24 billion (+26% YoY)
Family of Apps (FB, IG, WA, Messenger): $50.8 billion (99% of total)
Almost all from advertising: $50.1 billion (+26% YoY)
Ad impressions +14%
Average price per ad +10%
Reality Labs (VR/AR/Quest/glasses): only $470 million (+74% YoY)
What do we learn? It earns almost all its revenue from ads on social apps, which generates a constant cash flow.
Total expenses Q3: $30.71 billion (+32% YoY)
Main items: salaries, infrastructure, legal, depreciation
Guidance for full-year 2025 expenses: $116-118 billion (+22-24% YoY)
Capex Q3: $19.37 billion
Guidance for full-year 2025 Capex: $70-72 billion (huge for AI data centers, GPUs, infrastructure)
Where the big cash is going:
AI infrastructure (data centers, compute)
Reality Labs losses: ~$4-5 billion per quarter
Buybacks & Dividends
The company is spending heavily on future products that are still losing money.
Cash & marketable securities (September 30, 2025): $44.45 billion
Long-term debt: $28.83 billion (stable, not pumping debt)
Net cash: +$15.6 billion (cash > debt)
Q3 free cash flow: $10.63 billion (positive despite crazy capex)
I'd like to point out that last quarter's earnings were drastically reduced due to some occasional tax payments.
In my opinion, I see an opportunity here: despite being an already established company with a generous market cap of 1.64T, I believe it could still yield significant potential (we've seen the rise of even larger companies like Alphabet or Nvidia). While it's accumulating cash with minimal expenses through social media ads, which are now (fortunately or unfortunately) ingrained in our daily lives, it's investing mountains of money (which it earns regularly and without debt) in innovative sectors and products with significant growth potential, which could eventually dominate their industry.
It hasn't had incredible performances lately; compared to its sector peers, it performed much less strongly last year, even less than the SP500 (which could be an advantage; for once, we're not buying at the highs). It currently has a P/E ratio of 29, which isn't particularly low, but I urge you to look for something less overvalued in the current market, especially in the tech sector. If there were to be a retracement or even a bear market in 2026, as some claim, Meta should be less affected, being already closer to its fair value.
So, I'm thinking about it. Do you already have any shares or options? What do you think?
Obviously, this isn't financial advice; do your research before deciding.