Down about 8% after hours and 30% off its highs.
Just running some quick numbers. I can see Free Cash flow going negative during the AI buildout. Should CAPEX start to normalize (from 135% OCF in FY28 to 70% OCF by FY30) we could be looking at a high quality company trading at a 13% discount to intrinsic value indicating about a 10% IRR over 12 years (7 year DCF with a second stage shelf growing at 6%).
Discount Rate: 10%, Terminal Growth rate 3%.
Thoughts on the numbers below?
I have historically been skeptical of anything AI related mainly due to the lofty valuations without any margin of safety, but it some of these pullbacks are starting to look attractive.
At the moment, I have no position, and I think I would wait until a 20% discount to intrinsic value, but wanted to see if anyone else in the value community was considering Meta.
|FY2026|FY2027|FY2028|FY2029|FY2030|FY2031|FY2032|
|:-|:-|:-|:-|:-|:-|:-|
|Revenue|$245,179|$289,311|$332,707|$379,286|$426,697|$469,367|$511,610|
|Revenue Growth %|22%|18%|15%|14%|12.50%|10%|9%|
|Diluted Shares (M)|2,535.00|2,497.00|2,460.00|2,435.00|2,411.00|2,387.00|2,363.00|
|Operating Cash Flow|$139,752|$165,775|$191,307|$218,089|$245,351|$269,886|$294,176|
|OCF Margin %|57%|57.30%|57.50%|57.50%|57.50%|57.50%|57.50%|
|CapEx|$125,777|$207,219|$258,264|$218,089|$171,746|$161,932|$147,088|
|CapEx (% of OCF)|90%|125%|135%|100%|70%|60%|50%|
|Total Debt|$62,888|$82,888|$105,219|$98,140|$98,140|$94,460|$88,253|
|Intrinsic Value / Share|$688|$776|$889|$1,002|$1,093|$1,177|$1,255|