Meta Financial Report (FY 2026)

Project Overview

Meta Platforms (formerly Facebook) stands at a critical inflection point. After years of regulatory scrutiny, platform challenges, and the rise of AI, the company is aggressively investing in infrastructure and AI capabilities—particularly the metaverse and large language models.

To understand Meta's financial health and future prospects, I built a comprehensive three-statement financial model projecting 2026-2029. This report walks through the model, highlights key assumptions, and shares my findings on what Meta's financials reveal about the company's strategy and shareholder value.

Problem Statement

Investors and analysts need to understand if Meta's massive capital expenditures ($90B+ annually) on AI and the Metaverse are a sound strategic investment or value destruction. The report aims to answer:
1. Is Meta's revenue growth durable?
2. Can margins expand despite high R&D spending?
3. Is the aggressive buyback program sustainable?

Strategy / Model Definition

The core of this analysis is a Three-Statement Financial Model that projects Meta's Income Statement, Balance Sheet, and Cash Flow Statement through 2029.

Key Assumptions:
- Revenue: 24% CAGR (2026-2029), driven by AI-driven ad efficiency and Reels monetization.
- Margins: Gross Margin holds at 80%; Net Margin expands to ~31% by 2029 due to operating leverage.
- Capex: Stabilizes at $90B annually (steady state) after the 2025 peak, supporting AI infrastructure.

Methodology

Process and tools used:

• Built a 3-statement model matching historicals (2022-2025).
• Projected Revenue, Expenses, and Capex based on strategic analysis.
• Calculated Free Cash Flow (FCF) and performed DCF valuation.

Metrics & Evaluation Criteria

The model evaluates financial health using the following key metrics. Additionally, comprehensive graphs and valuation tables have been included in the downloadable report for deeper analysis.

• Free Cash Flow (FCF): The ultimate measure of value generation.
• Net Margin: Profitability after all expenses.
• Capex intensity: Investment required to maintain growth.
• ROIC / ROE: Returns on invested capital.

Results & Observations

The model projects a "Cash Generation Machine" scenario:

1. Massive FCF: Meta generates $191.9 billion in Free Cash Flow by 2029 (40% margin).
2. Margin Expansion: Despite 28% of revenue going to R&D, Net Margins remain industry-leading at ~31%.
3. Capital Returns: The company returns $213B annually to shareholders via buybacks by 2029, a highly shareholder-friendly policy.
4. Valuation: DCF analysis suggests a fair value of $1.2-1.4 Trillion ($500-600/share).

Interpretation & Limitations

Bull Case: Meta is a fortress with negative net debt, printing cash, and trading at a reasonable valuation given its growth.

Bear Case / Risks: The $90B+ annual Capex is a massive bet. If AI/Metaverse revenue doesn't materialize, this capital is destroyed. Regulatory headwinds and competition (TikTok) also pose risks to the core ad business.

Project Artifacts

Key Takeaways

1. Revenue Growth is Durable: 24% growth driven by AI efficiency and new formats.
2. Capex is the Wild Card: $90B/year is high; efficiency here determines future FCF.
3. Fortress Balance Sheet: Negative net debt provides immense strategic optionality.
4. Shareholder Friendly: Aggressive buybacks support EPS growth.