Meta Platforms, Inc.
A dominant ad engine, priced as if its AI spending will not pay off
RECOMMENDATION
Buy
PROB.-WEIGHTED VALUE
$796.40
IMPLIED UPSIDE
+30.0%
SHARE PRICE
$612.49
Close, October 28, 2026
SCENARIO WEIGHTS
25% bull · 50% base
25% bear
All per-share values are on a pre-distribution basis. Meta's Class C stock distribution takes effect on January 19, 2027, and will roughly double the share count.
The thesis at a glance
WHAT I LIKE
- Meta's advertising revenue grew 26% in Q3 2026, compared with 12% for Google Search.
- 3.64 billion people use Meta's apps every day, and the average price per ad rose 14%. Short-form video and AI are the key drivers.
- Even the bear case value ($647.44) is above the current share price.
WHAT WORRIES ME
- Meta expects $135 to $145 billion of capital expenditures in 2026, and free cash flow turned negative in Q3.
- In all three scenarios, unlevered free cash flow stays negative through 2027 and turns positive only in 2028.
- Capital discipline is the key swing factor.
NEXT CATALYST
The 2027 capex budget, due with Q4 results in late January, is the next big test.
Read the report
PDF, US Letter · {{docLangText}}The model behind the report
Excel · available on requestBear, base and bull as one linked model, not three spreadsheets, so the bridge between cases is visible on a single page. Every growth assumption sits on its own row so each one can be argued with.
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Share price $612.49, October 28, 2026. Source: author's model.