Adam Khoo on $META (Oct 30, 2026)

In their latest earnings reports, broadband companies such as Amazon, Meta Platforms, Alphabet, and Google have reported negative free cash flow.

Meta Platforms, which announced its results a few days ago, saw its stock fall by 7% after the earnings. In fact, it dropped by 12% and then recovered, but it is still down by 7%

I'm looking at revenue growth, and it's growing very well. You can see Alphabet (Google) with revenue growth of 25%, Meta at 26%, and Amazon at 13% after excluding the effects of foreign exchange rate changes

Now, you might be wondering: "Hey, Meta's stock is down 37%. Why?" That was a one-off because they paid a fine—well, not a big one, actually a small one—to settle their social media addiction case, if you remember, right?

So, if you exclude that, their operating income actually grew by 11%.

Meta's company grew by 24% in the past twelve months. As for the third quarter on a year-over-year basis, Meta rose by 9% and Amazon by 19%.

However, in the case of Amazon, Meta, Microsoft and Google, their operating cash flows are growing very well. So, they are generating more cash flow from their businesses, right?

Therefore, this indicator is on the rise. But why are their free cash flows declining? The reason is that their capital expenditures have recently increased. Why did their capital expenditures increase?

Because they are investing billions upon billions to build these data centers to solidify their leadership in the artificial intelligence revolution. So, because of the rise on this side, the other side temporarily fell.

Meta's stock also fell by 12% but has since recovered, however it is down 7% since the earnings announcement. Again, what is fear? Again, in addition to the negative free cash flow I mentioned, another concern is that operating income has fallen by 37% and they haven't met their earnings per share guidance, so to speak, have they?

But why? Why did that happen? Well, because of the settlement of the lawsuit. They were sued over a teen social media addiction case, if you recall, and were supposed to be fined $1 billion, but ultimately paid a small reduced penalty of about $9.89 billion in fees.

If you exclude that, operating income actually increased by 11%. So again, is this a cyclical or a structural issue? It's my turn. It is an exceptional event that will not be repeated. Good?

Another concern is that Meta raises funds by selling shares. So people think, "Oh my God, this will dilute my share of the stock." So, they panic and sell their shares. Good? Now, why are they raising money?

Again, to finance the growth of capital expenditures. Therefore, they finance it using debt and some equity. So, how much money are they collecting? They are raising $37.5 billion in shares.

So, when a company sells shares to raise money, does that dilute the shareholders' stake? Yes, it does. But the question is, by what amount will this reduction be? Secondly, will this capital lead to a further increase in market size in the long run?

The answer is that I believe it will increase the market size even further. So, I'm not too worried. But the actual dilution, if you do the math, is a 2.4% dilution of current shareholders' equity.

So, logically, the stock price should decrease by 2.4%, right? But it fell by 12%. Well, the market tends to overreact to bad news. So, if you take advantage of this exaggeration, that's how you get good deals in the market, right?

If you look at the core business, you can see that it works very well, just like Alphabet. Revenue rose by 26%, marking the third consecutive quarter in which advertising revenue growth has exceeded 25%, and they are forecasting revenue for the fourth quarter to be between $73 billion and $76 billion.

Advertising impressions grew by 10%, and advertising rates increased by 14%, indicating significant pricing power and a very strong economic moat. The number of daily active users, meaning 3.64 billion people who use Facebook, Instagram or WhatsApp daily, increased by 3%.

So again, is it a dying business? Is it a declining trade? You are the one who makes the decision. For me, it's a business that's becoming increasingly powerful and dominant, especially now that they've launched their new AI agent that's become so popular.

It's the most downloaded app in the United States, and it's just arrived in Singapore and I'm trying it out now.

So again, you can calculate intrinsic value by doing the same thing I showed you earlier, calculating the consolidated free cash flow, taking the current cash from operations and subtracting the five-year average capital expenditure.

That should give you a consolidated free cash flow of $79 billion. So if you put $79 billion into an intrinsic value calculator and drop it at growth rates, you get roughly an intrinsic value of between $1,000 and $1,200.

This is correct. But you can see that Oracle's value is actually more conservative and shows a valuation of $900. So this is actually very conservative, as we are using a much lower growth rate than others.

Even with this very conservative assessment, Meta— sorry, not Google, but Meta—is undervalued by 31%.

Again, as I said, does this mean that Meta will reach $900 or $1,000 tomorrow? Of course not, right? In the short term, it may fall further. You can never predict the short term, but in the long term, you know it will continue to grow, and that its value is no less than $900 to $1,000 or more, right?

And if you look at the graph again, you can see that it has been fluctuating here. There is very strong support at the 150 green line, the 150 level on the weekly timeframe. correct?

As you can see, an upward wave, then a rebound, then a rebound, then a rebound. It looks like it might bounce back from here, but if it doesn't, it might bounce back from here, and it's likely to rise again by the end of the year.

I can't predict with 100% certainty, but this is just my guess.