Daniell Wright @Twistery: "𝐃𝐞𝐚𝐫 𝐅𝐨𝐥𝐥𝐨𝐰𝐞𝐫𝐬 𝐚𝐧𝐝 𝐂𝐨𝐩𝐢𝐞𝐫𝐬 I hope..."

South Africa

𝐃𝐞𝐚𝐫 𝐅𝐨𝐥𝐥𝐨𝐰𝐞𝐫𝐬 𝐚𝐧𝐝 𝐂𝐨𝐩𝐢𝐞𝐫𝐬 I hope you are all doing well. I don’t hold Meta right now. However, its slower price performance and recent earnings swings prompted me to check whether the market’s discount is justified. Since it’s a company I’d like to own, I built a DCF model with three revenue paths to estimate its intrinsic value and test how sensitive the result is to discount-rate assumptions. 📊 𝐃𝐂𝐅 𝐈𝐧𝐩𝐮𝐭𝐬 / 𝐀𝐬𝐬𝐮𝐦𝐩𝐭𝐢𝐨𝐧𝐬 ✅ Forecast period: 10 years ✅ Discount rate (WACC): calculated at 10.4% via CAPM ✅ Terminal growth rates: 2% and 3% (determined from back testing my DCF model) ✅ Revenue growth rate (Base): 17% (±3% for bull and bear cases) 📈 𝐃𝐂𝐅 𝐑𝐞𝐬𝐮𝐥𝐭𝐬 ✅ Bear Case (14% growth): Intrinsic value of $573-606 ✅ Base Case (17% growth): Intrinsic value of $713-754 ✅ Bull Case (20% growth): Intrinsic value of $885-939 ✅ Average of three cases (before WACC sensitivity): Intrinsic value of $724-766 ✅ Current Market Price: $640 ✅ Analyst Consensus Target: ~$840 Under my base case, Meta appears slightly undervalued at current levels. 🔎 𝐖𝐀𝐂𝐂 𝐚𝐧𝐝 𝐓𝐞𝐫𝐦𝐢𝐧𝐚𝐥 𝐆𝐫𝐨𝐰𝐭𝐡 𝐑𝐚𝐭𝐞 𝐒𝐞𝐧𝐬𝐢𝐭𝐢𝐯𝐢𝐭𝐲 𝐀𝐧𝐚𝐥𝐲𝐬𝐢𝐬 (𝐁𝐚𝐬𝐞 𝐂𝐚𝐬𝐞) Meta doesn’t disclose WACC. Providers like Bloomberg, Morningstar, Finbox, and GuruFocus place it between 9% and 13%, which is higher than the 7–9% range that appears in many consensus models. To see how this affects valuation, I ran a sensitivity analysis using the Base growth path and the results are shown in the attached table. Key takeaways from the sensitivity analysis: ✅ At 𝟕-𝟗% 𝐖𝐀𝐂𝐂, valuations overlap with analyst targets. ✅ At 𝟏𝟎-𝟏𝟐% 𝐖𝐀𝐂𝐂, fair value tightens to $539-755. ✅ At 𝟏𝟑-𝟏𝟒% 𝐖𝐀𝐂𝐂, valuations fall well below the current price. At $640, the market is effectively pricing Meta using a WACC around 11%. 📊 𝐏𝐞𝐞𝐫 𝐕𝐚𝐥𝐮𝐚𝐭𝐢𝐨𝐧 𝐂𝐨𝐦𝐩𝐚𝐫𝐢𝐬𝐨𝐧 To further evaluate Meta’s financial standing, I compared its Price-to-Book (P/B), Price-to-Earnings (P/E) ratios and average revenue growth against key competitors, see data in attached table. Meta trades below the industry average on both P/E and P/B despite delivering stronger revenue growth than its peers. It’s priced as if risks carry more weight than its growth potential. ⚖️ 𝐂𝐨𝐧𝐜𝐥𝐮𝐬𝐢𝐨𝐧 Meta is a business I’d like to own. At $640 it looks modestly undervalued under my Base case, but only if discount rates stay near 10%. If they remain closer to 13%, fair value moves well below current levels. Analysts using 7–9% WACC may be projecting a best-case environment. I am cautiously optimistic but prefer to remain patient and wait for a better entry point or evidence that financing conditions are easing. All the best, Daniell 📢 Please note this is not investment advice. $META (Meta Platforms Inc) $GOOG (Alphabet) $SPX500 $NSDQ100

Not investment advice. The author may have financial interests in the mentioned instruments.