r/valueinvesting
Deep Value Quality Growth Stock - views on META are bifurcated
META is undervalued at 19x fwd P/E despite strong AI-driven ad growth, high FCF, and new revenue streams; author plans to buy on dips.
- Attractive valuation with 19x forward P/E relative to strong fundamentals including $50B TTM free cash flow.
- AI integration (Lattice architecture) is driving tangible user engagement and ad revenue growth (33% FOA growth).
- Emerging catalysts like subscription models and potential cloud/data center leasing could expand multiples.
- Technical momentum is weak after losing major support at $600, suggesting potential further downside to low $500s.
- High capital expenditure ($75B TTM) required for AI infrastructure poses a risk if ROI does not materialize as expected.
META is one of those names that are either really loved or really hated by people on the internet. And you don’t really see anybody in the middle.
I like META just because I see the numbers. They are a major AI beneficiary trading 21x earnings with forwarded P/E at 19x. They are also a cash machine for their size: 1.5T market cap / 125B topline / 50B FCF (and that’s TTM numbers with the 75B TTM CAPEX numbers).
And I’m not throwing “AI beneficiary” as a buzzword here.
The Lattice architecture drove the user retention to hit a 4-year high. I’ll use q1 2026 numbers as reference: instagram reel watch time grew 10% yoy/ facebook video watch time grew 9% yoy (and overall FOA ad impression grew 19% yoy)
Meta’s ad business also really gets the job done: so much so that it had a 12% increase in average price per ad yoy.
If you put ad impression growth and price growth together, FOA grew 33%. This isn’t the “dying business” kind of growth for sure.
And recent news has been nothing but good news: such as the new subscription based model is estimated to bring in a 2-3B ARR / Jensen Huang said “nobody uses AI better than META” / & other potential catalyst that I couldn’t really come up with a number yet but could really expand the multiples: new cloud computing business, data center leasing.
All of that and it’s still trading at 19x Fwd P/E. The only caveat is the momentum isn’t looking too good as the chart recently lost a major support at $600. Personally, if I see the stock capitulate to the low 500s, I’d size up heavily on it.
And I’m not throwing “AI beneficiary” as a buzzword here.
Just "deep value", then?
I'm on the meta gang too.
Long term this will double for sure, short term? they might issue shares and get this to 500.
Keep dcaing and be toxic on instagram 😄
I dislike META as a business, however those numbers are too good to ignore and i am heavily invested.
Thinking about selling a liver if the price drops further
I’d be extra careful here. I think it’s high likely we see a much better price a month from here given the liquidity event with Space X and upcoming fomc.
This. Very much this. Despise them as an entity, love them as a potential returns monster.
Sold about 70% of my stake at 640 last week. Glad I did. Friday's drop took me below my remaining cost basis but I'm buying the shit out of it right now. Under 600 is madness.
I am also very bullish on the stock for a few reasons. They not only print money and will continue to do so but I also really like their push into wearables. Their smartglasses look great and are already quite impressive, the advances they've made in just the past 2 years are very noteworthy but often overlooked. They are ahead of Apple in this space and their pricing is much more affordable.
I do think that the price targets of $800-900 are quite realistic.
I’d normally think you’re nuts, but I was talking with some friends this weekend & two of them had Meta’s glasses. I was pretty surprised bc neither strikes me as the early adopter or instagramer type. But both were pretty into them.
Not unless the capex is worth it. And I really question whether it is with Meta.
To the extent that technical analysis works, it’s mainly because people think it works. Beyond the short term, I don’t think it’s predictive of much.
Anyhow, I’ve been encouraged with how well Meta seems to have utilized AI to improve marketing & their pullback from the metaverse. The narrative now is still about their recent AI capex numbers, but that will eventually shift. It’ll take a bit of time perhaps.
I don't think you understand what deep value is pal
Meta at monthly ema50 will be retarded money, quick +20% bounce then hold til +50%
Same setup as msft
Edit : since this post is not about value investing
Remember they dropped to 8 P/E just 4 years ago.
Meta ad business is a monster on that I agree. But their capital allocation is what I'm doubtful of. Billions wasted on metaverse and ROIC has just lately returned to pre-metaverse levels.
From a long term compounding point of view this kind of capital allocation destroys owner value. Now with AI and even bigger bets. Will the ROI be there? We'll see. If meta started to return cash to shareholders I might ve interested.
The only caveat is the momentum isn’t looking too good as the chart recently lost a major support at $600
That was because of the rumor of them going an offering like google, not because of natural price action. It stabilized today in the 580s and even went back into the 590s for a bit.
Agreed that META is a great value play, if it goes to the low 500s then I'll go in it even more, and it is already my biggest position by far at 610 a share.
Their ads have insane potential thanks to AI, and their capex is going to data centers that they'll be able to lease out if their own AI work doesn't need or benefit from it. They burnt money on the metaverse and haven't seen any serious returns from it, basically one bad call and now they're considered as having a reputation for being extremely stupid with capex for basically one (albeit serious) strike
It’s an interesting point. However, they are well positioned in the sense that they have a lot of operating income to throw at capex if that’s what they want to do.
That said, I really do question what they’re doing with it all. Why does Meta need to pump money into developing AI beyond what they’ve already done? I sort of don’t fully understand.