Meta Platforms Inc
NASDAQ:META
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Intrinsic Value
The intrinsic value of one META stock under the Base Case scenario is 396.02 USD. Compared to the current market price of 591.8 USD, Meta Platforms Inc is Overvalued by 33%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Meta Platforms Inc
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Fundamental Analysis
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Meta Platforms Inc., formerly known as Facebook Inc., has reinvented itself over the years, evolving from a social media platform into a multifaceted technology conglomerate. Founded in 2004 by Mark Zuckerberg, Meta has expanded its offerings beyond Facebook to include Instagram, WhatsApp, and Messenger, each boasting billions of active users. With a mission to connect people and foster communities, Meta's platforms have become integral in digital communication and social interaction. Investors are drawn to the company's robust advertising model, which generates substantial revenue from businesses eager to leverage its vast user base for targeted marketing. Despite facing scrutiny regarding...
Meta Platforms Inc., formerly known as Facebook Inc., has reinvented itself over the years, evolving from a social media platform into a multifaceted technology conglomerate. Founded in 2004 by Mark Zuckerberg, Meta has expanded its offerings beyond Facebook to include Instagram, WhatsApp, and Messenger, each boasting billions of active users. With a mission to connect people and foster communities, Meta's platforms have become integral in digital communication and social interaction. Investors are drawn to the company's robust advertising model, which generates substantial revenue from businesses eager to leverage its vast user base for targeted marketing. Despite facing scrutiny regarding privacy concerns and data management, Meta’s continuous investment in innovative technologies, like virtual and augmented reality, reflects its commitment to shaping the future of digital engagement and commerce.
As Meta sets its sights on the ambitious “metaverse,” the potential for growth has never seemed more tantalizing. The company is channeling resources into building immersive virtual environments that promise to redefine social interaction and business operations. While competition from other tech giants is fierce and regulatory challenges loom, Meta’s substantial cash reserves and strong market presence position it well to endure short-term volatility. For investors, the story of Meta is one of transformation and resilience, encapsulating the opportunities and risks inherent in the fast-evolving tech landscape. As they look to the future, savvy investors will heed the lessons of adaptability and foresight that characterize Meta’s journey in a world increasingly driven by digital connectivity.
Meta Platforms Inc., formerly known as Facebook, operates through several core business segments that collectively drive its revenue and shape its overall strategy. These segments primarily include:
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Advertising:
- This is the largest and most significant segment of Meta's business. The company generates the majority of its revenue through targeted advertising across its platforms, including Facebook, Instagram, Messenger, and the Audience Network. Advertisers use Meta’s sophisticated algorithms and vast user data to create targeted campaigns aimed at specific demographics and interests, enhancing advertising effectiveness.
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Family of Apps:
- This segment encompasses various applications and services that Meta owns, including:
- Facebook: The core social networking platform.
- Instagram: A photo and video-sharing platform popular among younger users, also known for promoting influencer marketing.
- WhatsApp: A widely used messaging app that focuses on private communications.
- Messenger: A messaging platform that originated as part of Facebook but has evolved into a standalone service.
- This segment encompasses various applications and services that Meta owns, including:
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Reality Labs:
- This segment represents Meta’s investments in virtual reality (VR) and augmented reality (AR) technologies. It includes products like the Oculus VR headset and the development of the metaverse—a collective virtual shared space. Reality Labs aims to create immersive experiences and social interactions in virtual environments.
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Commerce:
- As part of its family of apps, Meta has been integrating e-commerce features into its platforms. This includes Facebook Shops and Instagram Shopping, enabling businesses to sell products directly through these social media platforms, thereby providing users with a seamless shopping experience.
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Other Initiatives:
- Meta is also involved in various other projects and initiatives, such as enhancing digital connectivity and supporting privacy and security measures for users. These may not be traditional revenue-generating segments but are essential for the company's long-term strategic vision.
Overall, Meta Platforms Inc. is heavily focused on advertising as its primary revenue driver while also investing in the future of virtual interactions through Reality Labs and e-commerce initiatives. As the digital landscape evolves, these segments may adapt and grow in response to changing user behaviors and technological advancements.
Meta Platforms Inc. (formerly Facebook) possesses several unique competitive advantages that distinguish it from its rivals in the social media and digital advertising landscapes:
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Extensive User Base: Meta boasts a vast and diverse user base across its platforms (Facebook, Instagram, WhatsApp, and Messenger). This large user engagement creates substantial network effects, making it challenging for new competitors to attract users and advertisers.
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Data-Driven Insights: Meta has access to a wealth of user data, allowing for highly targeted advertising. This capability helps advertisers reach specific demographics more efficiently than competitors, offering better return on investment.
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Innovative Advertising Solutions: The company continually invests in developing advanced advertising technologies (like augmented reality ads) and formats that enhance user engagement and advertiser effectiveness, giving it a competitive edge.
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Integration Across Platforms: Meta's ability to integrate services across its different platforms allows for a seamless user experience and smoother ad campaigns spanning multiple channels. This ecosystem enhances user retention and engagement.
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Strong Brand Recognition and Trust: Despite facing various controversies, Meta maintains strong brand recognition and remains one of the most visited websites in the world. This recognition plays a vital role in attracting users and advertisers alike.
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Financial Resources and Scale: Meta's significant financial resources enable it to invest in technology, talent, and acquisitions. This scale provides advantages in research and development, marketing, and operational efficiencies.
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Continued Innovation and Future Investments: Meta’s focus on future technologies, such as virtual and augmented reality through its Metaverse initiatives, positions it well for long-term growth and differentiation from traditional social media players.
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Strategic Acquisitions: Meta has successfully acquired and integrated key companies, such as Instagram and WhatsApp, which have not only expanded its user base but also enriched its product offerings and capabilities.
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Customization and Automation: Meta leverages machine learning and AI to optimize ad delivery and enhance user experience, giving advertisers the ability to automate their campaigns and target potential customers effectively.
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Community Building Features: Meta has robust tools that foster community, such as Groups, Events, and Pages. This focus on community-oriented features encourages longer user engagement, thereby increasing ad exposure.
These advantages collectively create a formidable competitive barrier, making it challenging for new entrants and existing competitors to displace Meta Platforms Inc in the digital advertising and social networking sectors.
Meta Platforms Inc. (formerly Facebook) faces a variety of risks and challenges that could impact its business performance in the near future. Here are some of the key areas of concern:
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Regulatory Scrutiny: Meta is under significant scrutiny from governments and regulators worldwide concerning privacy, data protection, and antitrust issues. Increased regulation could lead to fines or operational changes that impact profitability.
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Competition: Platforms like TikTok and other social media channels are competing for user attention and advertising revenue. The evolving landscape requires Meta to innovate continuously to retain its user base and advertisers.
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User Growth: While Meta has a large user base, growth in mature markets like the U.S. and Europe is slowing. They need to find ways to attract new users in emerging markets without compromising monetization.
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Monetization of New Ventures: Meta is heavily investing in the metaverse and virtual reality. There are risks associated with the long-term monetization of these new avenues, as the timeline for profitability is uncertain.
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Public Perception and Trust: Ongoing issues related to misinformation, content moderation, and privacy breaches can damage Meta's reputation. Building and maintaining user trust is critical for its platforms to thrive.
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Economic Conditions: Global economic downturns can lead to reduced advertising budgets from businesses, directly affecting Meta's revenue. Ad-dependent business models are particularly vulnerable under such circumstances.
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Technological Changes: Rapid technological changes can disrupt how social platforms operate. Staying ahead of trends and adapting to new technologies is crucial for maintaining relevance.
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Cybersecurity Threats: Like any tech company, Meta is a target for cyber-attacks and data breaches, which can lead to financial losses and erosion of user trust.
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Content Moderation: Balancing freedom of expression with the need to prevent harmful content remains a challenge. Striking the right balance is crucial to avoid backlash from users and regulators.
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Talent Retention: The competitive tech landscape means that attracting and retaining top talent is increasingly difficult, particularly in the fields of AI, VR, and general software development.
Each of these risks can have far-reaching implications for Meta's strategic direction and overall financial performance, making it essential for the company to develop robust risk management and strategic planning practices.
Revenue & Expenses Breakdown
Meta Platforms Inc
Balance Sheet Decomposition
Meta Platforms Inc
Current Assets | 76.4B |
Cash & Short-Term Investments | 58.1B |
Receivables | 14.5B |
Other Current Assets | 3.8B |
Non-Current Assets | 153.8B |
Long-Term Investments | 6.2B |
PP&E | 117B |
Intangibles | 21.6B |
Other Non-Current Assets | 8.9B |
Current Liabilities | 27B |
Accounts Payable | 3.2B |
Accrued Liabilities | 15.8B |
Other Current Liabilities | 8B |
Non-Current Liabilities | 46.5B |
Long-Term Debt | 18.4B |
Other Non-Current Liabilities | 28.1B |
Earnings Waterfall
Meta Platforms Inc
Revenue
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149.8B
USD
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Cost of Revenue
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-27.7B
USD
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Gross Profit
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122.1B
USD
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Operating Expenses
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-61.4B
USD
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Operating Income
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60.6B
USD
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Other Expenses
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-9.2B
USD
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Net Income
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51.4B
USD
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Free Cash Flow Analysis
Meta Platforms Inc
USD | |
Free Cash Flow | USD |
Meta reported a strong Q2 with a 22% increase in total revenue, reaching $39.1 billion. Operating income rose to $14.8 billion with a 38% margin. The company is benefiting from improvements in AI, boosting ad performance and user engagement across its apps, including Facebook, Instagram, and WhatsApp. Reality Labs saw a 28% revenue increase but incurred a $4.5 billion loss. Looking ahead, Meta projects Q3 revenue between $38.5 billion to $41 billion and anticipates significant CapEx growth in 2025 to support AI and metaverse advancements.
What is Earnings Call?
META Profitability Score
Profitability Due Diligence
Meta Platforms Inc's profitability score is 75/100. The higher the profitability score, the more profitable the company is.
Score
Meta Platforms Inc's profitability score is 75/100. The higher the profitability score, the more profitable the company is.
META Solvency Score
Solvency Due Diligence
Meta Platforms Inc's solvency score is 92/100. The higher the solvency score, the more solvent the company is.
Score
Meta Platforms Inc's solvency score is 92/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
META Price Targets Summary
Meta Platforms Inc
According to Wall Street analysts, the average 1-year price target for META is 613.62 USD with a low forecast of 262.6 USD and a high forecast of 851.55 USD.
Dividends
Current shareholder yield for META is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
META Insider Trading
Buy and sell transactions by insiders
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Profile
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Description
Meta Platforms, Inc., engages in the development of social media applications. The company is headquartered in Menlo Park, California and currently employs 71,970 full-time employees. The company went IPO on 2012-05-18. The firm is engaged in the products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality (VR) headsets, wearables, and in-home devices. The firm operates through two segments: Family of Apps (FoA) and Reality Labs (RL). FoA includes Facebook, Instagram, Messenger, WhatsApp, and other services. RL includes augmented and virtual reality-related consumer hardware, software, and content. Facebook enables people to connect, share, discover and communicate with each other on mobile devices and personal computers. Instagram is a place where people can express themselves through photos, videos, and private messaging, and connect with and shop from their favorite businesses and creators. Messenger is a messaging application for people to connect with friends, family, groups, and businesses across platforms and devices.
Contact
IPO
Employees
Officers
The intrinsic value of one META stock under the Base Case scenario is 396.02 USD.
Compared to the current market price of 591.8 USD, Meta Platforms Inc is Overvalued by 33%.