馃摫 META PLATFORMS: ANALYSIS 馃摫
Meta Platforms, Inc. engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. It operates in two segments, Family of Apps and Reality Labs. The Family of Apps segment offers Facebook, Instagram, Messenger and WhatsApp. The Reality Labs segment provides augmented and virtual reality related products comprising consumer hardware, software, and content that help people feel connected, anytime, and anywhere.
Based on a sample of the last year [Dec/23 TTM], its average margins have been:
- Gross margin: ≈ 79.9%
- Operating margin: ≈ 31.9%
- EBITDA margin: ≈ 41.3%
- Net margin: ≈ 23.7%
Pros:
- Strong margins and growing revenues where Instagram (reels) and the number of active users has been relevant
- Quarterly dividend payment (could force entry into dividend-based funds and stabilize its price stock) and buy-backs program
- Strength in its generative AI (it could be more efficient than Google's by having a monopoly on frequent communication) and business messaging
Cons:
- Strong losses in Realty Labs (could erode some of the profits)
- Unforeseen loss of users (seasonality) and its typical issues about privacy and other fines
- Possible stagnation as it stops being a growth company and becomes one of value (by beginning to pay dividends) and until its Realty Labs and Metaverse projects bear fruit (Metaverse will be the future: governments are turning to Social Control)
Based on the last report, their normalized annual EPS was ≈ $15.23 USD and its last average ROIC [TTM] was ≈ 27.35%. If an annual average Forward PER 27 is set as a benchmark with an EPS intensity of ± 29.88%, the potential forward spread target for the next 12 months could be:
- Optimistic: ≈ $534.29 USD
- Neutral: ≈ $411.38 USD
- Negative: ≈ $288.47 USD
At least, an EPS of $2.2035 USD is required for the next quarter, to keep the metrics.
In other hand, if an annual average Forward EV/EBITDA 15 is set, an EBITDA increases of ± 43%, a Net Debt increases of 0%, a Dividends increase of 0% and Shares Outstanding increases of -3.42%, the potencial spread price target for the next 12 months could be:
- Optimistic: ≈ $542.5 USD
- Neutral: ≈ $353.9 USD
- Negative: ≈ $190.31 USD
Finally, according to its current P/S ratio, a possible spread might be at:
- P/S 6: ≈ $315.43 USD
- P/S 12: ≈ $630.86 USD
The best analysis is yours!
M.F. J. Joel Padilla
Copyright: Joel Padilla 2024
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