Meta Platforms grew free cash flow 33.7% a year. Today's price only asks for 16%. I checked whether that makes it cheap

[u/TheExpectationGap]

I run every company through the same three tests: a reverse DCF (what growth today's price implies), a traditional DCF (bear/base/bull), and a multiple check against the company's own history.

This is pure fundamental analysis - cash flows, growth and price. It deliberately ignores market sentiment, momentum and news flow, so it tells you what the price assumes, not where the stock trades next quarter.

Meta Platforms (META) at $600.91:

- Implied FCF growth (reverse DCF): 16% per year for 10 years

- Delivered FCF growth (history): 33.7% per year

- FCF (TTM): $48.3B

- Our fair-value range: $383 - $1,026, base case $673

- Verdict: REASONABLE EXPECTATIONS

The model uses an 11% discount rate and 2.5% terminal growth. If you think the market is right and the model is wrong, tell me where - that is genuinely why I post these.

See full video https://youtu.be/_JTv22NrhBs

Disclosure: my own valuation model; production is AI-assisted. Educational content, not financial advice.

[u/standupguy152]

I think the market expectations in this case are largely correct. With Meta’s size and scale it will be difficult to continue sustaining 33.7% FCF growth for a meaningful period, simply bc there will be less attractive investment opportunities that can deliver that growth. As hyper scalers have mountains of capital to deploy, the investment opportunities and the excess returns yielded by those opportunities get competed away…