Value Opportunity: META

I previously posted that my portfolio going into 2026 is comprised of NVDA, MU, META, GOOGL, MSFT and LLY. This week, I’m taking a deeper dive into META. [META Valuation Analysis](https://docs.google.com/spreadsheets/d/17gJJdxJ2Ln8qjyZg7qFQcsojnt6wwni-X6cgxFpXhPE/edit?usp=sharing) Trailing twelve-month (TTM) revenue through 9/30/25 was $189 billion with a 43% operating margin. The Wall Street consensus is for revenue to increase 21% in 2025 to $199 billion and 18% in 2026 to $235 billion. 99% of revenue and 122% of operating income comes from the Family of Apps division. The Reality Labs division generated $2 billion of TTM revenue with an operating loss of $18 billion. **Value Score** META generates 61 Value Points from 43% TTM operating margin plus 18% projected revenue growth. Dividing this by the operating multiple of 17 provides a **Value Score of 3.5**. This puts META firmly in Buy territory. There was a lot of concern at the last earnings call when META mentioned they were going to invest heavily in AI. Given that statement, I wanted to look at the free cash flow of the company.  TTM capital expenditures were $63 billion, 68% higher than $37 billion for 2024. The company’s cap ex guidance for 2025 was $70-72 billion. For 2026, I assumed the cap ex would grow slightly from the 2025 guidance. This created a multiple of 42 for the enterprise value divided by the projected unlevered free cash flow. The **adjusted Value Score of 1.5** is firmly in Hold territory. **Segment Valuation** Another technique for valuing the company was to apply revenue multiples to each division and see if the projected equity value is greater than or less than the current market value. The median trailing revenue multiple for companies with a market value greater than $100 billion is 3.36, while the median Value Points is 25.84. This implies that each 7.7 Value Points is worth a 1x multiple. For simplicity and to be generous, **I assumed a 1x multiple for each 7 Value Points of the division**. I applied an 11x multiple to the Family of Apps’ $187 billion of revenue. I was very generous in applying a 3x multiple to Reality Labs’ $3 billion of revenue, which is really a startup valuation metric rather than a public company metric. The formula suggests that **META has 27% potential upside in its stock price**. As always, please do your own research before making any investment decision.