$META · Value Investing with Sven Carlin, Ph.D. · 2026-11-07

Meta Platforms, we have discussed it over time. The stock has now dropped slightly, but it has been stable for a while. Perhaps the most important thing is that it continues to grow cumulatively.

It has its ups and downs, and crises due to Mark Zuckerberg's spending of money. But it continues to grow, and revenues are growing strongly. However, the operating margin is decreasing from 43-48 % to 20% in the current quarter.

Well, we have to adjust net income because of a nearly $10 billion cost to a settlement with the state attorney general, but again, we have some first-quarter tax benefits that we have to adjust.

I have summarized all of this. We reached 77 billion in net income, which is a huge number. For each share, when everything is adjusted, you get 29.77 per share.

Then, if we move on to our core value, I have put in yellow those that we have updated. You can download this for free from the link in the description below . There is also the free course which includes all the explanations, but what is new is the book as well , the intrinsic value, all the concepts, and everything.

I believe I have tried to cover everything related to value investing in this book from A to Z, from beginning to end. It's a rather large book, so enjoy it. Here we have earnings per share with very conservative growth rates of 8%, with an expected discount rate of 10 %, and a price-to-earnings ratio of 20.

This is still far from the current share price, but with Facebook, it's volatile. He could arrive there tomorrow. However, if we take into account market expectations for the growth rate, with Bill Ackman predicting 20% growth, then yes, Facebook is significantly undervalued, and at those levels it is likely to achieve an annual return of 16% for the next ten years, which is insane.

But that's what it means for a stock to be cheap. So you have great upside potential in a crisis situation. I really don't know what would have to happen in a very difficult situation for the stock to go down.

Perhaps I should change the odds here so that it is not 45, yes, and put 10 here. So when you compare the stock price against the investment, it is a cheap stock and a positive situation in terms of risk and reward.

As for ad impressions, they pile them up, but they are able to do so. So there is revenue growth, and the price of advertising is also rising, by double digits, which is very good.

But that's the danger. Capital expenditures are exploding because Mark wants to dominate artificial intelligence in the future. He always wants to play with the big boys. He is doing very well.

I don't know why he feels so abandoned, but okay. He spends a lot of cash flow, and it turns into negative cash flow on top of that . That's why it's priced so cheaply . You look at the intrinsic value and say, "What a deal!"

However, there are $700 billion in AI liabilities, while only $83 billion is on the balance sheet, $350 billion in leases, and $350 billion in purchase liabilities. This is the future of Meta.

Yes, Wall Street is extremely optimistic. They are looking at the cash flows. Meta will more than double by 2030 thanks to artificial intelligence. But we need to get past the two years of negative cash flows here .

This is from a recent Financial Times article, and the article begins by discussing how magical thinking flourishes in the later stages of the bubble. Is this a bubble in its final stages?

Meta's five-year credit default swap rises slightly. Well, nothing crazy there, but they are issuing bonds, raising capital, with a $100 billion dilution of stocks. When you look at the total buybacks they've done over the past five years, or better yet the past decade, at $200 billion, they're now going to dilute them all.

Yes, sometimes at lower prices , but that's okay. The risk and reward will depend entirely on this. If they achieve the growth rates, and if cash flows in from higher revenues or other sources, reaching $100 billion in free cash flow by 2030 may not be great news for Meta.

However, the price-to-earnings ratio will be 15 after adjusting things.

And then, during the discussion, I asked Gemini here to tell me if, in five years, instead of going into Facebook, I would be able to have an agent to extract what I wanted from all these applications.

Therefore, the advertising world may collapse as a business model. The answer was that the technology already exists, and that this means the death of ad suppression, but Facebook, Instagram and TikTok have strict closed systems and they do everything to prevent that from happening.

But ultimately, you own the thing , so you can't be forced to do too many things. This is another risk that could backfire on Facebook , or perhaps this is why Mark is investing so much in artificial intelligence because he understands what it can do to his traditional business .

The announcement from companies to agents will see that Mark is pushing hard for "Muse," which is very interesting, but it increases the risks and rewards of the situation. It makes it a gamble, and therefore, yes, the returns are higher than 10% as we discussed in intrinsic value, but it is extremely risky.

Yes, Meta will have $ 100 billion, and Amazon will have $200 billion in cash flow, but there is a question mark over whether this will work.