Meta Platforms, Inc. (META) stock intrinsic value fair value estimate & owner earnings analysis

Meta Platforms owns Facebook, Instagram, Messenger and WhatsApp, which it reports together as the Family of Apps. That group earned $198.76 billion of Meta's $200.97 billion revenue in 2025, almost all of it from advertising. Reality Labs makes virtual and augmented reality hardware and software. It brought in $2.21 billion in 2025 and had an operating loss of $19.19 billion. In 2025 the number of ads shown rose 12% and the average price per ad rose 9%. In December 2025 an average of 3.58 billion people used at least one of Meta's apps every day. Revenue has grown about 25% a year since 2016, and it grew 30% in the first half of 2026. How we measure earnings. We start with cash from operations and remove short-term swings in working capital. We count stock compensation as a real cost ($20.43 billion in 2025). We then subtract the capital spending needed to keep the business where it is. Payments on finance leases count as capital spending, which is how Meta reports its own $72.22 billion of 2025 capital spending. We treat only part of the spending as investment for growth: about 22 cents for each extra dollar of revenue, which is Meta's ten-year average. Everything else counts as the cost of staying in business. On that basis Meta earned about $12.51 per share in 2025, $15.68 in 2024 and $11.12 in 2023. Our starting level is $12.50, the middle value for 2021 to 2025. That period covers a full advertising cycle, including 2022, when revenue fell and almost nothing was left after capital spending. In 2025 Meta booked a $15.93 billion tax charge after the One Big Beautiful Bill Act. Most of it was a non-cash write-down of tax assets, so it does not reduce these figures. The same law's 15% minimum tax does affect future cash, and we assume cash taxes rise toward it. The central issue. An AI data-center build-out is using up most of Meta's earnings. Capital spending was about 24% of revenue in 2024, 36% in 2025 and about 43% in the first half of 2026. Long-term debt rose from $28.83 billion at the end of 2024 to $83.66 billion in June 2026. At the end of 2025 Meta had also signed $103.77 billion of data-center and network leases that had not yet started. In October 2025 it took a 20% stake in a Louisiana data-center venture. Meta will lease space there for $12.31 billion starting in 2029, and it has guaranteed up to about $28 billion of the properties' value. Owner earnings fell about 20% in 2025 even though revenue grew 22%. The first half of 2026 was helped by unusually low cash taxes: $2.0 billion paid, against $5.5 billion a year earlier. Operating margin in the second quarter of 2026 was 31%, down from 43% a year earlier. Base case: $556.23 per share. Revenue growth slows from about 24% in 2026 to 5% by 2035, when revenue reaches about $525 billion. Capital spending stays at 42% to 43% of revenue through 2027. That pushes owner earnings down to about $5 per share in 2026 and about $3 in 2027. Spending then falls to 26% of revenue by 2032. That is still above the roughly 21% Meta averaged from 2016 to 2024, because AI servers wear out faster than the buildings and networks of the past. Our evidence that spending can come down is Meta's own record: after its 2022 spending surge, it cut capital spending in 2023. Cash margins before capital spending stay near 42%, below 2025's 48%, to allow for the minimum tax and fast-rising staff costs. Owner earnings reach about $35 per share by 2035. They grow 2.5% a year for another decade, supported by the rising ad prices Meta has shown, and then stay flat. About three-quarters of this value comes from after 2035. Low case: $80.95 per share. In this case the AI spending does not pay off. Revenue growth falls to 3% a year from 2030, and capital spending stays near a third of revenue. Legal and regulatory pressure pushes cash margins down to 38%. That pressure includes youth-harm lawsuits from U.S. states and school districts. It also includes the European Commission's April 2025 ruling against Meta's 'subscription for no ads' model in Europe, which supplies about 23% of revenue, and the FTC's January 2026 appeal of its loss in the Instagram and WhatsApp case. The case also assumes about $15 billion of settlements and a $10 billion payment on the Louisiana guarantees. Owner earnings turn negative in 2027 and 2028, then shrink 3% a year after 2035. High case: $1,180.40 per share. Growth starts at 28% in 2026 and eases to 7%. Capital spending returns to its 2016 to 2024 average of about 21% of revenue by 2032, and cash margins stay near 2025's level. Owner earnings reach about $67 per share by 2035, then grow 4% a year for another decade. We do not subtract debt separately. Interest is already paid out of the cash flows we count, and the extra borrowing is reflected in the low case. This view would be wrong if capital spending keeps rising as a share of revenue after 2027, or if ad prices stop rising. The margin-of-safety price is $290.00 per share, about 48% below the base value, because the result depends so heavily on a spending cycle that has not yet peaked and on earnings far in the future. Figures for 2026 come from the company's structured quarterly data, not a full quarterly report. About $1.3 billion of first-half 2026 working-capital movement could not be broken down.