Uni e sidade do Minho
Escola
de
Economia
e
Ges ão
João Ca los Ribei o Pin o
Equi y Resea ch Repo :
Me a
Pla o ms Inc.
Decembe
2024
Equi y
Resea ch
Repo :
Me a Pla o ms Inc.
João Ca los Ribei o Pin o
UMinho
|
2024
Uni e sidade do Minho
Escola de Economia e Ges ão
João Ca los Ribei o Pin o
Equi y Resea ch Repo : Me a Pla o ms Inc.
P oje o de Mes ado
Mes ado em Finanças
T abalho e e uado sob a o ien ação do
P o esso Dou o Nelson B andão da Cos a A eal
Decembe 2024
ii
DIREITOS DE AUTOR E CONDIÇÕES DE UTILIZAÇÃO DO TRABALHO POR
TERCEIROS
Es e é um abalho académico que pode se u ilizado po e cei os desde que espei adas as eg as
e boas p á icas in e nacionalmen e acei es, no que conce ne aos di ei os de au o e di ei os
conexos.
Assim, o p esen e abalho pode se u ilizado nos e mos p e is os na licença abaixo indicada.
Caso o u ilizado necessi e de pe missão pa a pode aze um uso do abalho em condições não
p e is as no licenciamen o indicado, de e á con ac a o au o , a a és do Reposi ó iUM da
Uni e sidade do Minho.
iii
S a emen o In eg i y
I he eby decla e ha ing conduc ed his academic wo k wi h in eg i y. I con i m ha I ha e no used
plagia ism o any o m o undue use o in o ma ion o alsi ica ion o esul s along he p ocess leading o i s
elabo a ion.
I u he decla e ha I ha e ully acknowledged he Code o E hical Conduc o he Uni e si y o Minho.
i
Disclaime
This Equi y Resea ch Repo was p epa ed o academic pu poses only by João Pin o, a s uden o he Mas e ’s in Finance a he
Uni e si y o Minho. The epo was supe ised by a acul y membe ac ing me ely as an academic men o .
Nei he he au ho o his epo no he supe iso a e ce i ied in es men ad iso s. This epo should be ead as a pu e academic
exe cise o a mas e s uden . The in o ma ion used o p oduce his epo is gene ically a ailable o he public om di e en sou ces
and belie ed o be eliable by he s uden . The s uden is he sole esponsible o he in o ma ion used in his epo , as well as he
es ima es and o ecas s, applica ion o alua ion me hods, and iews exp essed.
The UMinho and i s acul y membe s ha e no unique no o mal posi ion on hose ma e s and do no ake esponsibili y o any
consequences o he use o his epo .
Acknowledgemen s
In he i s place, I would like o exp ess my deepes g a i ude o P o esso Nelson A eal. You guidance, supe ision,
and pa ience ha e been c ucial h oughou he de elopmen o his p ojec . Also, you men o ship and expe ise had
a huge impac on my wo k and academic g ow h and I am e y happy o conclude his p ojec wi h you as my
supe iso .
I am o e e indeb ed o my amily, especially my pa en s, o hei uncondi ional lo e and suppo o e my academic
jou ney. You belie in me and hei suppo , especially du ing he mos challenging momen s, is he main key o
my pe se e ance and success and I eel e y special o ha e you in my li e.
To my iends, hank you o you cons an suppo , encou agemen and ai h in my abili ies. You companionship
and unwa e ing suppo ha e been a g ea sou ce o mo i a ion h ough his jou ney, and I am uly g a e ul o ha e
such special people in my li e. I am e y hank ul o sha e his pa h wi h you.
I would also like o ex end my since e app ecia ion o all he p o esso s in ol ed in he Mas e 's in Finance p og am
a he Uni e si y o Minho. The knowledge, insigh s, and p ac ical skills impa ed by each o you ha e been in aluable
in p epa ing me o bo h academic and p o essional endea o s.
Las ly, I am g a e ul o e e yone who has con ibu ed o my academic and pe sonal de elopmen h ough hese wo
yea s. You suppo , in i s many o ms, has made his achie emen possible.
i
Resumo
Es e abalho acadêmico consis e num Equi y Resea ch Repo sob e a emp esa Me a Pla o ms Inc., elabo ado em
con o midade com os pad ões de pesquisa es abelecidos pelo CFA Ins i u e. Impo an e e e i que a in o mação u ilizada pa a
a condução des e p oje o e e e-se exclusi amen e a dados publicamen e disponí eis a é 1 de e e ei o de 2024. Toda a análise
oi baseada unicamen e em in o mações a é essa da a, sem le a em conside ação desen ol imen os ou e en os
subsequen es.
O obje i o des e ela ó io é conduzi uma análise ap o undada da Me a Pla o ms Inc., incluindo uma a aliação do desempenho
inancei o da emp esa, a sua posição compe i i a, pe spe i as de c escimen o, bem como ou os a o es ele an es que
possam in luencia o alo in ínseco das suas ações.
Es abelecendo-se na úl ima década como um dos gigan es na indús ia da ecnologia e edes sociais, a Me a Pla o ms, Inc.
o e ece nos dias de hoje se iços pa a quase me ade da população. Com uma capi alização de me cado supe io a 1 ilião de
dóla es, a emp esa con inua a impulsiona a ino ação e o desen ol imen o, ap imo ando os seus se iços e acompanhando o
ápido c escimen o da indús ia.
A a aliação baseia-se em ês abo dagens dis in as: o mé odo dos luxos de caixa descon ados, a a aliação ela i a e o mé odo
dos di idendos descon ados, es imando os componen es inancei os da emp esa pa a um pe íodo de dez anos.
Com base na análise ealizada, a ecomendação de in es imen o pa a a emp esa é de comp a, com um p eço al o de 543,71
dóla es a é ao inal de 2024, e le indo uma po encial alo ização de 12.69%.
ii
Abs ac
This academic wo k consis s o an Equi y Resea ch Repo on Me a Pla o ms Inc., p epa ed in acco dance wi h he esea ch
s anda ds es ablished by he CFA Ins i u e. I is impo an o no e ha he in o ma ion used o his p ojec is based exclusi ely
on publicly a ailable da a up un il Feb ua y 1, 2024. All analysis was conduc ed solely based on in o ma ion a ailable un il his
da e, wi hou conside ing subsequen de elopmen s o e en s.
The pu pose o his epo is o conduc an in-dep h analysis o Me a Pla o ms Inc., including an e alua ion o he company's
inancial pe o mance, i s compe i i e posi ion, g ow h p ospec s, as well as o he ele an ac o s ha could in luence he
in insic alue o i s sha es.
O e he pas decade, Me a Pla o ms Inc. has es ablished i sel as one o he gian s in he echnology and social media
indus y, cu en ly p o iding se ices o almos hal o he global popula ion. Wi h a ma ke capi aliza ion exceeding 1 illion
dolla s, he company con inues o d i e inno a ion and de elopmen , imp o ing i s se ices while keeping pace wi h he apid
g ow h o he indus y.
The alua ion is based on h ee dis inc app oaches: he discoun ed cash low me hod, ela i e alua ion, and he discoun ed
di idend model, es ima ing he company’s inancial componen s o e a en-yea pe iod.
Based on he analysis conduc ed, he in es men ecommenda ion o he company is a buy, wi h a a ge p ice o 543.71
dolla s by he end o 2024, e lec ing a po en ial upside o 12.69%.
3
0
2
4
6
8
10
12
14
16
18
20
2021 2022 2023
Re enue in millions
Cos s and expenses
0%
10%
20%
30%
40%
50%
60%
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
2021 2022 2023
Income/loss om ope a ions in M
G ow h %
01000 2000 3000
Wha sApp
WeCha
Messenge
Teleg am
Snapcha
01000 2000 3000
Wha sApp
WeCha
Messenge
Teleg am
Snapcha
Figu e 6 -Mos popula global mobile messenge apps as
o Ap il 2024 (S a is a)
Figu e 7 – Reali y Labs Re enues and Cos s and
expenses (Sou ce: company 2023 annual epo )
Figu e 8 - Income/loss om Reali y Labs (Sou ce:
company 2023 annual epo )
ex ensi e in se e al ex , audio and ideo communica ion me hods ac oss
di e en pla o ms and de ices.
Me a is a leade in he Messaging App ield, leading wi h a huge di e ence om
he compe i o s ha ing wo o he h ee mos used Apps (Figu e 6).
Wha sApp
Wha sApp has been an in eg al pa o communica ion ac oss he globe, and
is o en p aised o i s ease o use, unc ionali y, and enhanced secu i y. This
messaging applica ion has gained commendable a en ion om indi iduals and
en e p ises ac oss he con inen s as i s use in holding sa e and secu e p i a e
and business con e sa ions and e en ca ying ou ansac ions has p o ed o
be indispensable. The company is a leade in Messaging Apps in 2024 (Figu e
6).
REALITY LABS
The o he di ision o he o ganiza ion, Reali y Labs, is conce ned wi h he
c ea i e ad ancemen o i ual and augmen ed eali y esea ch and
echnology. In line wi h he b oade ision o he Family o Apps, Reali y Labs
aims o ans o m he e y essence o human connec ions by allowing people
o o e come space ba ie s in a bid o c ea e a whole new le el o in e ac ion
and engagemen . Wi h ad anced VR ha dwa e, cu ing-edge so wa e, and
compelling con en , he di ision is commi ed o empowe ing indi iduals o eel
deeply connec ed, i espec i e o ime and place. The e enue om his di ision
is gene a ed om he deli e y o consume ha dwa e p oduc s, ela ed so wa e
and con en .
Cu en ly, his di ision is expe iencing no able unp o i abili y, cha ac e ized by
modes e enues ha cons i u e a minimal sha e o he o al income, coupled
wi h ele a ed ope a ing cos s. The company had epo ed a $16.1 billion in
ope a ion losses in 2023 on his di ision, su passing he alue p esen ed on
he p e ious yea 13.17$ billion. The e enue o his di ision, as al eady
men ioned, is almos insigni ican when compa ing hese alues. The company
has consequen ly p esen ed d ops on his p ojec e enue om $1.89 billion
in 2023, $2.16 billion in 2022 and om $2.27 billion in 2021 (Figu e 7).
In es o s a e exp essing some conce n o e his pa icula di ision due o
ala ming igu es, pa icula ly in e ms o ope a ing losses and he subs an ial
in es men p ojec ed. Disce ning how he o ganiza ion in ends o eco e o
ea n e u ns om hese in es men s p o es o be ala ming o he in es o s.
The o ganiza ion migh be called upon o gi e a mo e s a egic and anspa en
ou e in o de o highligh he p ojec s o in es o s as no only iable in he
sho e m bu also in he long- e m add essing some conce ns and p esen ing
a clea pa hway p o i abili y
4
41%
27%
23%
9%
O he Ins i u ional In es o s
Mu ual Funds
Public Companies
Inside s (Including Managemen )
Figu e 9 - Company Boa d o di ec o s S uc u e
(Sou ce: company 2023 annual epo )
Figu e 10 - Me a Owne ship (Sou ce: Tip anks)
Figu e 11 - "How Me a go o e Silicon Valley’s disdain o
di idends." (Sou ce Financial Times)
COMPANY STRUCTURE
MANAGEMENT
Me a Pla o ms adhe es o a cen alized unc ional o ganiza ional s uc u e,
whe e Ma k Zucke be g assumes he posi ion o he highes au ho i y,
o e seeing he boa d o di ec o s (Figu e 9). In collabo a ion wi h his execu i e
eam, Ma k Zucke be g ac i ely shapes he o e a ching ision and p oduc
s a egy o Me a, placing pa icula emphasis on he con inual ad ancemen
o se ices, echnology, and in as uc u e de elopmen . This leade ship
app oach ensu es a cohesi e and ocused di ec ion o he company unde
Ma k Zucke be g's guidance.
SHAREHOLDER STRUCTURE
As pe he o m 10-K o Decembe 2023, he company has epo ed a o al o
2,200,048,907 ou s anding sha es o class A common s ock, each
ep esen ing one o e pe sha e. In e ms o owne ship dis ibu ion,
Ins i u ional In es o s held he majo i y s ake a 67.80%, wi h Mu ual Funds
con ibu ing 27.34% and O he Ins i u ional In es o s accoun ing o 40.46%.
Indi idual In es o s and Public Companies collec i ely owned 22.94%, while
Inside s, including managemen , held a modes 9.25%.
In addi ion, Me a had 349,356,199 sha es o class B common s ock
ou s anding, each ep esen ing 10 o es pe sha e. This class o s ock is
p edominan ly owned by key igu es such as Ma k Zucke be g, Me a's
managemen , and di ec o s. The owne ship s uc u e o class B sha es a o ds
Zucke be g and his managemen eam e ec i e con ol o he company,
ensu ing a concen a ed and in luen ial decision-making capabili y.
SHARE REPURCHASE PROGRAM
S a ed in 2017, Me a ha e launched he sha e epu chase p og am wi h no
limi o he sha es, cash o pe iod o ime in which he p og am was
implemen ed. As o Decembe 31, 2023, he epu chase amoun a ailable and
au ho ized was $30.93 billion dolla s. The e o e, he company also decla ed
an addi ional $50 billion sha e epu chase p og am o 2024, which amoun s
o nea ly i e pe cen o he sha es in ci cula ion using Me a one illion-dolla
alua ion as an example.
This subs an ial epu chase au ho iza ion is an indica ion o he soundness o
he i m’s inancial capaci y o e he yea s; as he i m’s abili y o gene a e
cash has been s ong. Such sha e epu chase p og ams a e gene ally posi i ely
ega ded by he in es o s as hey can help inc ease he sha e p ice when he
numbe o sha es in ci cula ion is educed hus helping in inc easing ea nings
pe sha e.
DIVIDEND
The company o he i s ime e e will dis ibu e di idends in 2024. The CEO
has announced in he las qua e o 2023 esul s ha he company will
dis ibu e 50 cen s in he i s qua e o 2024 and in ends o con inue o
dis ibu e di idends on a qua e ly basis, depending on ma ke condi ions.
5
0
50000
100000
150000
200000
250000
2019 2020 2021 2022 2023
P ope y, Plan & Equipmen To al Asse s
97%
3%
Weigh o Equi y Weigh o Deb
0
20000
40000
60000
80000
100000
120000
140000
160000
2019 2020 2021 2022 2023
PPE Re enues
Figu e 12 - Me a capi al s uc u e (Sou ce: company
2023 annual epo )
Figu e 13 - PPE o e enues (Sou ce: company 2023
annual epo )
Figu e 14 - PPE o o al asse s (Sou ce: company
2023 annual epo )
Susan LI, he company CFO had old analys s, du ing he ea nings call, ha
his mo e will allow he company a mo e balanced capi al e u n p og am as
well as mo e lexibili y in he way he company is able o e u n capi al in he
u u e.
This ype o measu e is gene ally well- ega ded by in es o s, as usually i is a
s ong indica o o he company's good inancial heal h
CAPITAL STRUCTURE
Me a boas s a obus and a luen capi al s uc u e. Up un il 2022, he
company s ood ou in he S&P500 as he sole en i y wi hou any deb . Howe e ,
in 2022, Me a o he i s ime has s a egically issued $10 billion in deb ,
inc easing in 2023 o $18.99 billion o deb . Despi e his mo e, he company
con inues o exhibi an excep ionally posi i e inancial a io wi h a book alue
deb - o-equi y a io o app oxima ely 3% (Figu e 13).
The inancial a ios poin owa ds a obus and sound company s uc u e o
Me a, indica ing a lack o excessi e isk and p o iding no e iden cause o
conce ns ega ding sol ency. As o now, he e's no compelling e idence
sugges ing signi ican changes in he capi al s uc u e in he nea u u e. Ou
assump ion is ha he g ow h o ope a ing lease liabili ies will likely align wi h
e enue inc eases, while he g adual epaymen o long- e m deb is expec ed
o e ime.
His o ically, Me a has no hea ily elied on deb inancing, p ima ily because
he company, being a obus gene a o o cash, didn' ind i necessa y. Ins ead,
Me a achie ed imp essi e g ow h by u ilizing i s subs an ial cash ese es and
equi y o inance a ious in es men s and ini ia i es. This s a egic app oach
has con ibu ed o he company's inancial heal h and has been a key ac o in
i s ema kable g ow h ajec o y.
INVESTED CAPITAL
The company has adhe ed o i s his o ic s a egy o inc easing hei P ope y,
Plan , and Equipmen (PPE) by in es ing in se e s, ne wo k asse s, and new
cons uc ions o accommoda e i s g ow h, eaching a PPE alue o $143 billion
in 2023. O e he pas i e yea s, he company's PPE has a e aged 88.63% o
i s e enue. No ably, in he las wo yea s, PPE alues ha e exceeded e enues,
as we can see pe Figu e 13.
The igu e 15 shows ha PPE has been occupying a la ge sha e o o al asse s
o e he ime. This end e lec s he company’s s a egy ocus and g owing
in es men in his a ea.
In 2023, he company epo ed $28.1 billion in capi al expendi u es, wi h
expec a ions o he nex yea anging be ween $30 billion and $37 billion. The
o ecas ed g ow h is a ibu ed o in es men s in se e s, including bo h AI and
non-AI ha dwa e, as well as da a cen e s, o s ay ahead o indus y inno a ion
p e iously announced on p e ious epo s. Ou o ecas p edic s ha capi al
expendi u es will con inue o inc ease h oughou he pe iod due o he ongoing
need o indus y inno a ion in es men and u he in es men s in he
me a e se.
6
-10%
0%
10%
20%
30%
40%
50%
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
17 18 19 20 21 22 23
Re enues G ow h %
Figu e 15 - Re enues pe o mance (Sou ce: company 2023
annual epo )
Figu e 16 - "Apple's $12 billion s ike o Facebook is
suddenly aking shape." (Sou ce Fo bes)
FISCAL POLICY
While he ax igu e g ew om $1.497 billion in he yea 2022 o $2.791 billion
in he yea 2023, he e ec i e ax a e educed om 24% o 17% in he cou se
o he pe iod. The co po a ion an icipa es ha he o e all s a u o y ax a e shall
ho e wi hin he ange o mid- eens in he yea 2024 ba ing any change o he
cu en egime o axa ion in he Uni ed S a es.
Wi h he elec ions d awing close , i is necessa y o weigh wha in luence o
impac bo h pa ies can ha e on he company pe o mance aking in o accoun
pa icula ly he iscal policy. A Democ a ic win could esul in an inc ease on
he co po a e ax o e he coming yea s, which may a ec he company
p o i abili y and s a egic planning.
DYNAMIC OVERVIEW
REVENUES
Me a has shown as onishing e enue g ow h e e y yea since i s incep ion,
c edi ing mos o i s pe o mance o he inc ease in he cus ome base. This
g ow h has enabled he company g ow and o become a leade on hei
indus y, being esponsible o a huge po ion o he ma ke capi aliza ion in
he ad e ising indus y.
The o ganiza ion eco ded a 23.74% Compound Annual G ow h Ra e (CAGR)
du ing he pe iod o 2017 o 2021. This is indica i e o many yea s o s able
g ow h and subs an ial ma ke leade ship. Howe e , in ano he his o ic ea ,
he company also su e ed a collapse in i s yea -o e -yea e enues o he e y
i s ime in he yea 2022.
This down u n can be p ima ily a ibu ed o he ollowing key ac o s:
(ATT): The in oduc ion o App T acking T anspa ency by Apple, enables use s
o deny pe mission o app acking, which in u n a ec s he company’s abili y
o un pe o mance ad e ising. Con en ional o ms o e enue-gene a ing
a ge ed ad e ising ha e been dis up ed hanks o his policy change, and his
has s ained he i m e enues.
Compe i ion om TikTok: The me eo ic ise o TikTok has eshaped he social
media landscape, posing a o midable challenge o es ablished pla o ms.
TikTok's apid ascen o p ominence has di e ed use a en ion and ad e ising
spending away om o he pla o ms, including he company in ques ion,
he eby a ec ing e enue g ow h.
Declining G ow h Ra e o Family Mon hly Ac i e Use s (MAUs): The g ow h in
he Family Mon hly Ac i e Use s (MAUs) has been on a downwa d end o
some ime now which has limi ed he g ow h o he company’s use numbe s
as well as he inc ease in e enues. This segmen o he popula ion is
pa icula ly signi ican o nu u ing in ol emen and ensu ing p ope spending
p ac ices in he u u e, while i s slowdown in g ow h has hampe ed he i m’s
abili y o u n in e enues.
7
0
5000
10000
15000
20000
25000
30000
35000
40000
2019 2020 2021 2022 2023
Cos o Re enue
Resea ch and De elopmen
Selling, Gene al & Adminis a i e Expenses
0
20000
40000
60000
80000
100000
120000
140000
160000
2019 2020 2021 2022 2023
To al cos s Re enues
Ad e ising Reali y Labs & O he Re enue
Figu e 17 - Re enues s uc u e (Sou ce: company 2023
annual epo )
Figu e 18 - Me a o al cos s e olu ion (Sou ce: company 2023
annual epo )
Figu e 19 - To al cos o e enues (Sou ce: company 2023
annual epo )
Recession in he Ad e ising Ma ke : The o e all le el o ad e ising demand
seems o ha e d opped due o high in la ion, wa ensions, uel c ises in many
coun ies o he wo ld, which led o cu s in expendi u e on ad e ising, and his
has also led o educed Re enues. Down u n in he a ailabili y o ad e isemen
eal es a e e o ad e isemen se ices has limi ed he capaci y o he i m o
gene a e e enues.
Fo his ema kable his o ical e u n o g ow h, g ow h has been a yea on yea
o 16% in he yea 2023 wi h e enues a $137.90 billion. Mos o his g ow h
can be a ibu ed o he g ow h o FoA mone iza ion while e enue om he
Me a e se has con inued o decline mode a ely.
As pe he able below we can see he con ibu ion o bo h s eams o e enue
o he company. As men ioned be o e, Ad e ising is he main sou ce o
e enue wi h a signi ican pe cen age, making he con ibu ion o “Reali y Labs
& O he Re enue” almos i ele an .
COST STRUCTURE
The cos s o he company we e di ided in o h ee segmen s: 1) Cos o Re enue
e e s o he expenses di ec ly associa ed wi h p oducing goods o se ices sold
by a company. This ypically includes he cos s o aw ma e ials, labo ,
manu ac u ing o e head, and any o he expenses di ec ly ied o he p oduc ion
p ocess; 2) Resea ch and De elopmen (R&D) expenses ep esen he
in es men made by a company in o ac i i ies aimed a c ea ing and enhancing
p oduc s o se ices. This includes he cos s associa ed wi h scien i ic
esea ch, echnological inno a ion, and p oduc de elopmen e o s and 3)
Sales, Gene al, and Adminis a i e (SG&A) expenses encompass he a ious
cos s incu ed by a company ha a e no di ec ly ied o he p oduc ion o goods
o se ices. This ca ego y ypically includes expenses ela ed o sales,
ma ke ing, adminis a i e unc ions, and o e head cos s necessa y o suppo
he o e all ope a ions o he business.
As pe he Figu e 18, i 's e iden ha all segmen s ha e g own p opo ionally
wi h e enues o e he las i e yea s.
Wi hin he SG&A segmen , he e was a no able accele a ion in g ow h in 2019
and 2022, a ibu ed o unexpec ed expenses du ing hose yea s.
To mi iga e ising cos s, he company announced a s a egic ini ia i e in
No embe 2022, which in ol ed a educ ion in wo k o ce by app oxima ely
11,000 employees and he implemen a ion o a hi ing eeze un il 2023. These
measu es we e in ended o s eamline ope a ions and educe expendi u e.
Howe e , i 's c ucial o ecognize ha he e ec s o hese ac ions will no be
immedia e. The company plans o o e a se e ance package consis ing o 16
weeks' pay, wi h an addi ional wo weeks o each yea o se ice, along wi h
p o iding all emaining acc ued ime o and main aining heal h insu ance
co e age o six mon hs.
As a esul o hese ini ia i es, he company success ully hal ed he g ow h o
SG&A expenses, epo ing nea ly $23 billion in 2023—a dec ease o 10.5%
compa ed o 2022. Howe e , we an icipa e ha SG&A expenses will inc ease
8
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
2019 2020 2021 2022 2023
To al cos s G ow h %
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
80,0%
90,0%
2019 2020 2021 2022 2023
G oss P o i Ma gin - %
Ope a ing Ma gin - %
EBITDA Ma gin - %
Ne Ma gin - %
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
2019 2020 2021 2022 2023
ROE (1) ROA (2) ROIC
Figu e 20 - P o i abili y a ios e olu ion (Sou ce:
company 2023 annual epo )
Figu e 22 - P o i abili y a ios e olu ion (Sou ce: company
2023 annual epo )
Figu e 21 - E iciency a ios e olu ion (Sou ce: company
2023 annual epo )
o e he o ecas pe iod, as we belie e he company will need o con inue
in es ing o s ay compe i i e.
PROFITABILITY
Figu e 20 shows he e olu ion o he p o i ma gins o he company since 2019.
When compa ed o 2019, all he a ios ha e declined, wi h a la ge dec ease
no ed in 2022, due o high cos ela ed o he me a e se. Th ow Figu e 23 we
a e able o assume ha he company has imp o ed hei e iciency a ios when
compa ing o 2019. Howe e , hese alues did no g ow cons an ly wi h alues
luc ua ing om yea o yea . Figu e 22 mi o s he end obse ed in Table 1,
showing ha all a ios we e lowe in 2023 compa ed o 2019. A no able aspec
o hese a ios is hei e olu ion om 2022 o 2023. In 2022, he company
epo ed poo esul s, leading o a loss o in es o con idence. Howe e , his
was swi ly e e sed in 2023, wi h all a ios showing signi ican imp o emen .
2019
2020
2021
2022
2023
P o i abili y
G oss P o i Ma gin %
81,9%
80,6%
80,8%
79,6%
80,7%
Ope a ing Ma gin - %
41,0%
38,0%
39,7%
28,8%
37,2%
EBITDA Ma gin - %
49,1%
46,0%
46,4%
36,2%
45,5%
Ne Ma gin - %
26,2%
33,9%
33,4%
20,2%
29,4%
E iciency
ROE (1)
20,0%
25,4%
31,1%
18,8%
28,5%
ROA (2)
16,0%
19,9%
24,2%
13,4%
19,1%
ROIC
19,9%
25,3%
31,0%
17,7%
25,6%
Valua ion
P/E
31,93
27,07
24,43
13,80
23,46
P/S
8,35
9,18
8,15
2,79
6,90
P/B
5,79
6,07
7,38
2,50
5,92
Table 1 - Valua ion, E iciency and Valua ion a ios e olu ion a io (Sou ce: company 2023
annual epo )
2023
Companies:
META
GOOGL
AMZN
G oss P o i Ma gin - %
80,7%
56,9%
46,8%
Ope a ing Ma gin - %
37,2%
28,7%
6,4%
EBITDA Ma gin - %
45,5%
32,5%
11,8%
Ne Ma gin - %
29,4%
24,6%
5,2%
E iciency
ROE (1)
28,5%
28,1%
17,4%
ROA (2)
19,1%
19,7%
6,1%
ROIC
25,6%
26,0%
12,3%
Valua ion
P/E
23,46
23,42
77,87
P/S
6,90
5,78
4,30
P/B
5,92
6,20
5,89
Table 2 - Valua ion, E iciency and Valua ion a ios compa a ion wi h compe i o s
(Sou ce: Re ini i Eikon)
9
0,00
5,00
10,00
15,00
20,00
25,00
30,00
35,00
2019 2020 2021 2022 2023
P/E P/S P/B
0%
5%
10%
15%
20%
25%
30%
35%
0
200
400
600
800
1000
1200
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
Ads spending g ow h
0,00%
1,00%
2,00%
3,00%
4,00%
5,00%
6,00%
7,00%
8,00%
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Figu e 25 - Ads spending e olu ion and o ecas (Sou ce:
S a is a)
Figu e 24 - US his o ic in la ion (Sou ce: T ading Economics)
Me a p esen s a unique business model, making i challenging o ind sui able
pee s o compa ison. Howe e , co e business compa abili y be ween Me a
and Alphabe (GOOGL) comes ou as s ong om he ollowing able. Me a
epo ed e y s ong p o i abili y a ios in 2023 wi h numbe s ac oss he boa d
coming in highe compa ed o GOOGL. Bo h companies ha ed a e y high le el
o simila i y wi h hei e iciency and alua ion a ios being e y simila .
INDUSTRY AND MACROECONOMIC OVERVIEW
MACROECONOMIC OUTLOOK
The o e all ou look o g ow h on a global scale is pe cei ed o be consis en
wi h he o ecas s sugges ing a 3.1% g ow h in 2024 and a sligh imp o emen
o 3.2% in 2025. None heless, such ac i i ies may be hampe ed by high cen al
bank a es designed o igh in la ion and a ape ing o go e nmen spending
o e wo ies o high deb . No ably, in la ion is declining mo e apidly han
an icipa ed in mos egions, a ibu ed o he esolu ion o supply-side issues
and he implemen a ion o mo e es ic i e mone a y policies.
An encou aging aspec is ha , wi h he accele a ed disin la ion, he e is a
po en ial upside o companies as inancial condi ions could imp o e, os e ing
inno a ion and encou aging in es men . The posi i e p ojec ions ex end o
global headline in la ion, which is expec ed o dec ease om 5.8% in 2024 o
a u he decline o 4.4% in 2025. The same end occu s on he p ojec ions o
US in la ion a e, wi h he a e age consume p ice in la ion o be a ound 3.2%
in 2024 and 1.9% in 2025.
DIGITAL ADVERTISING INDUSTRY
Digi al ad e ising is he dynamic p ac ice o p omo ing p oduc s o se ices
ac oss online channels. The secu ing o ad placemen s has opened nume ous
oppo uni ies in he p omo ion o p oduc s o se ices h ough leads gene a ion
and sales enhancemen using app op ia e measu es, all wi h an aim o
inc easing he online a ic. Nowadays, we s ay in an age whe e in e ne
connec i i y has become a no m in ha human beings e en use he in e ne
o esea ch, leisu e and e en socializing wi h he o he s. Such a habi o using
digi al media is no only a ea u e o ou e e yday li e bu also plays a signi ican
ole in he g ow h and de elopmen o he Digi al Ad e ising Indus y along
wi h he passing o ime.
In ecen yea s, he digi al ad e ising indus y has expe ienced signi ican
g ow h, wi h p ojec ions indica ing ha i s ma ke is poised o su pass an
imp essi e $740.3 billion and i is expec ed o con inue o g ow in he u u e
(Figu e 25).
PORTERS FIVE FORCES
1. Compe i i e Ri als (High)
Al hough he i m is a clea leade in hei business sec o , i has o con end
wi h s i i al y since i unc ions wi hin a dynamic ma ke . The o ganiza ion
compe es side-by-side wi h o he social ne wo king si es such as Twi e ,
Figu e 23 - Valua ion a ios e olu ion (Sou ce: company
2023 annual epo )
10
Compe i i e
Ri als
Po en ial o
New
En an s in
he Indus y
Supplie
Powe
Cus ome
Powe
Th ea o
Subs i ui on
Re enue in billions o dolla es
Ra io (x)
META
134,9
1
GOOGLE
307,4
2,3
AMAZON
574,8
4,3
Table 3 - Compe i o Re enue Compa a ion (Sou ce: au ho
es ima es)
Figu e 26 - Po e 's Fi e Fo ces analysis (Sou ce: au ho
es ima es)
TikTok, and Snapcha . Also, Me a compe es wi h indi ec compe i o s such as
Google and Amazon, which a e d i en by ad e ising e enue.
2. Po en ial o New En an s in he Indus y (Low o Mode a e)
The social media and Ad e ising sec o p esen s signi ican and challenging
ba ie s o en y. The indus y is domina ed by majo playe s. Me a. Fo
example, i has al eady es ablished a huge s ong b and ecogni ion and use
loyal y, making i di icul o new en an s o a ac use s. Compe ing wi h such
well-es ablished companies equi e subs an ial inancial esou ces o
echnology, in as uc u e, and ma ke ing. Addi ionally, egula o y ba ie s a e
inc easing, pa icula ly conce ning da a p i acy and secu i y, adding ano he
laye o di icul y o new playe s in he ma ke .
3. Supplie Powe (Low)
The company's key supplie s include echnology p o ide s o e ing cloud
se ices, ha dwa e, and so wa e componen s, as well as con en c ea o s and
ad e ise s. Howe e , he e ec o hese supplie s on he company is o se as
he company ha e an excellen inancial capabili y which enable hem o make
conside able in-house acili ies, esea ch and de elopmen in es men s hus
lowe ing eliance on ou side sou ces. All he same, he need o each such a
as audience also makes i easie o con en c ea o s and in en o s o wo k
wi h Me a.
4. Cus ome Powe (High)
We ca ego ize he company cus ome s in o Indi iduals and Ad e ise s. While
Indi iduals do no di ec ly pay o he company's se ices, hei engagemen is
c ucial o he company's success and longe i y. Fo Ad e ise s, al hough
he e is s ong compe i ion, he company's la ge use base and e ec i e
ad e ising pla o m p o ide a compelling alue p oposi ion, ensu ing ad e ise
sa is ac ion and con idence o Me a Se ice.
5. Th ea o Subs i u ion (Mode a e o High)
As p e iously men ioned, he ma ke is highly compe i i e, and he e is always
he possibili y ha ends may shi , leading use s o choose al e na i e o ms
o en e ainmen and communica ion. Howe e , we belie e Me a is well-
equipped o e ain i s cu en use s and a ac new ones. The company's
ex ensi e sui e o apps (Facebook, Ins ag am, Messenge , Wha sApp) posi ions
i o adap o hese po en ial changes e ec i ely, ensu ing con inued
engagemen and ele ance in he e ol ing digi al landscape.
COMPETITORS
New companies om di e se indus ies, such as Ube , Ne lix, and Amazon,
a e en e ing he ad e ising ma ke by le e aging hei pla o ms o o e ad
se ices o o he businesses. While Me a has a s ong posi ion on social media
ad e ising, hese eme ging playe s a e g adually cap u ing a sha e o he ad
ma ke . Al hough ad e ising is no he p ima y e enue s eam o hese
companies, hey pose a long- e m h ea o Me a. Clien s may pe cei e hese
11
Table 4 - WACC Assump ions (Sou ce: au ho es ima es)
new oppo uni ies as mo e e icien and s a egically ad an ageous, po en ially
shi ing hei ad e ising spend away om adi ional social media channels.
GOOGLE
Google LLC is a subsidia y o Alphabe Inc. and is anked as one o he wo ld’s
leading in e ne sea ch and ad e isemen p o ide s. The company’s co po a e
s uc u e also includes impo an sec o s such as ad e ising, sea ch
unc ionali y, speci ic pla o ms and ope a ing sys ems, as well as managing
en e p ise and ha dwa e ela ed sec ions. The company p esen ed $307.4
billion o e enue in 2023, which is 2.3x highe han Me a.
Google s ands ou as Me a's p ima y compe i o , gi en hei sha ed eliance on
digi al ad e ising as a co e e enue s eam. In e ms o company size and
ma ke capi aliza ion, Google eme ges as he mos compa able coun e pa o
Me a in he compe i i e landscape. Bo h en i ies na iga e on he digi al ma ke ,
“ igh ing” o ma ke dominance in he cons an ly changing landscape o online
ad e ising and echnology.
AMAZON
Amazon.com, Inc. ope a es in he e ail sale o consume p oduc s, ad e ising,
and subsc ip ion se ice h ough bo h online and physical s o es, mainly in
No h Ame ica. S a ed om selling booking in 1994 bu quickly expanded in o
a b oad ma ke place, o e ing a as ange o p oduc s.
E en hough he company had a quick success in hei indus y, he company
has decided o di e si y hei business in o a eas such as Amazon Web Se ices
(AWS) o cloud compu ing, P ime o subsc ip ions, and di e en ad e ising
pla o ms. In 2023, Amazon p esen ed $574.8 billion o e enue, which is 4.3x
highe han Me a.
VALUATION
DCF VALUATION
WACC
DCF analysis employs he Weigh ed A e age Cos o Capi al [WACC] as i s key
inpu . WACC is a discoun a e ha helps us o es ima e he p esen alue o
ou u u e es ima ed cash lows. I is c ucial o use an accu a e WACC in DCF
analysis o gua an ee co ec calcula ion o p esen alue o he p ojec ed cash
lows due o small modi ica ions in inpu s ha can ma e ially a ec alua ion.
The ollowing o mula was applied:
𝑊𝐴𝐶𝐶 = 𝑅𝑒 ∗𝐸
𝐸+𝐷 +𝑅𝑑` ∗ 𝐷
𝐸+𝐷 ∗ (1 − 𝑡)
To begin, we calcula e he ma ke alue o he i m’s equi y by mul iplying he
o al numbe o sha es by he las sha e p ice o 2023, ending up wi h
$858,327,080,576.98. Nex , we es ima e he i m’s ma ke alue o Deb ,
which was $37,834,000,000.00. To ind ou he Cos o Deb , we use he US
Co po a e E ec i e Yield o he a ing o he c edi a ing o he company (AA)
– 5.05%. The c edi a ing om he company was e ie e om company
12
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
-10,00%
0,00%
10,00%
20,00%
30,00%
40,00%
50,00%
60,00%
70,00%
80,00%
0
500
1000
1500
2000
2500
3000
3500
2019 2020 2021 2022 2023
Reali y Labs Re enue G ow h
Figu e 27 - Me a MAU's o e he las 5 yea s in billions (Sou ce:
S a is a)
Figu e 28 - Me a o ecas ed MAU in he nex 10 yea s
(Sou ce: Au ho )
annual epo and he yield pe he cu en US co po a e a ing a he momen
on his a ing.
Ha ing he Cos o Deb calcula ed, we p oceed o he calcula ion o he cos
o equi y by using he Capi al Asse P icing Model [CAPM]. This model equi ed
a isk- ee a e (4,42%) ex ac ed om he Uni ed S a es 10-yea T easu y No e,
a ma ke isk p emium (4,60%), sou ced on he Ma ke Risk P emium
Damoda an websi e, and a Be a (1,11) based on a eg ession made be ween
he company mon hly p ice o e he las 10 yea s and he CRSP index, as we
did no ind sui able o his analysis o use he usual bo om-up app oach wi h
he pee s, due o he business di e ences. We go a Cos o Equi y o 9,574%.
By using all he inpu s necessa y and an e ec i e ax a e o 25%, alue d i en
by Damoda an websi e, we compu ed an a e age WACC o 9,574%.
Re enues
To o ecas he company's e enue, we ha e ca ego ized i in o wo p ima y
e enue s eams: Family o Apps (FoA) and Reali y Labs.
Fo FoA, we ha e chosen o es ima e e enues based on he g ow h o he
company’s ac i e use s. To s a , we calcula e he a e age Yea ly Ac i e Use s
(YAU) g ow h o e he las i e yea s, a i ing o he alue o 8.71%. Howe e ,
acknowledging ha he e is a ini e numbe o possible use s, we decided o
use a mo e conse a i e app oach using 4% o g ow h in he i s i e yea s and
2% o he emaining ones. Despi e he mo e conse a i e app oach o he
YAU o ecas , he company’s abili y o a ac new use s due o inno a ion and
se e al eme ging ma ke s oppo uni ies, le us be e y con iden ha he alue
o ecas is possible and ealis ic. Then, we p oceed o calcula e he A e age
Re enue Use Re u n (ARPU). A e e alua ing bo h he las 3- and 5-yea s
a e ages, we chose o p oceed wi h he highe alue o $32.38 (3y A e age),
as we had al eady aken a conse a i e app oach on he o ecas o YAU.
Finally, we mul iplied he p ojec ed YAU by he ARPU o es ima e he o al
e enue igu es, as shown in Figu e 28.
We ha e also used a sensi i e analysis o obse e how he changes in YAU and
he a e age e enue pe use would in luence in o al e enue.
Sensi i e Analysis ($/Re enues in M) - MAU & A e age Re enue pe Use
A g Re .($) pe Use
MAU (in billions)
$ 131
948
3,31
3,51
3,71
3,91
4,11
4,31
4,51
31,77
105159
111513
117867
124221
130575
136929
143283
32,77
108469
115023
121577
128131
134685
141239
147793
33,77
111779
118533
125287
132041
138795
145549
152303
34,77
115089
122043
128997
135951
142905
149859
156813
35,77
118399
125553
132707
139861
147015
154169
161323
Table 5 - Sensi i e Analysis - MAU & A e age Re enue pe Use
Rega ding Reali y Labs, we obse ed ha while his segmen expe ienced a
con inuous g ow h in he pas , i has slowed signi ican ly down in he las 2
yea s, wi h e enues s agna ing a a ound $3 billion. F om hei minimal
19
Income S a emen
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Re enues
12 466
17 928
27 638
40 653
55 838
70 697
85 965
117 929
116 609
134 902
134 590
139 854
145 328
151 021
156 942
160 021
163 161
166 364
169 632
172 964
Ad e ising
11492
17079
26885
39942
55013
69655
84169
114934
113642
131948
131590
136854
142328
148021
153942
157021
160161
163364
166632
169964
Reali y Labs & O he Re enue
974
849
753
711
825
1042
1796
2995
2967
2954
3000
3000
3000
3000
3000
3000
3000
3000
3000
3000
Cos o Re enue
2153
2867
3789
5454
9355
12770
16692
22649
23754
26006
26918
27971
29066
30204
31388
32004
32632
33273
33926
34593
G oss P o i
10 313
15 061
23 849
35 199
46 483
57 927
69 273
95 280
92 855
108 896
107 672
111 883
116 262
120 817
125 553
128 016
130 529
133 091
135 705
138 371
Ope a ing Expenses
5319
8836
11422
14996
21570
28941
36602
48527
59300
59890
60566
62934
65398
67959
70624
72009
73422
74864
76334
77834
Selling, Gene al & Adminis a i e Expenses
2653
4020
5503
7242
11297
15341
18155
23872
25681
22979
26918
27971
29066
30204
31388
32004
32632
33273
33926
34593
Resea ch and De elopmen
2666
4816
5919
7754
10273
13600
18447
24655
33619
36911
33648
34963
36332
37755
39235
40005
40790
41591
42408
43241
Ope a ing P o i
4 994
6 225
12 427
20 203
24 913
28 986
32 671
46 753
33 555
49 006
47 107
48 949
50 865
52 857
54 930
56 007
57 106
58 227
59 371
60 537
Unusual Expenses/(Income)
0
0
0
0
0
5 000
0
0
4 611
2 255
3365
3496
3633
3776
3924
4001
4079
4159
4241
4324
O he Expense/(Income)
84
31
-91
-391
-448
-826
-509
-531
125
-677
-673
-699
-727
-755
-785
-800
-816
-832
-848
-865
P e ax Income
4 910
6 194
12 518
20 594
25 361
24 812
33 180
47 284
28 819
47 428
44 415
46 152
47 958
49 837
51 791
52 807
53 843
54 900
55 978
57 078
Income Taxes
1970
2506
2301
2387
3249
6327
4034
7914
4109
7190
7402
7692
7993
8306
8632
8801
8974
9150
9330
9513
Ne Income A e Taxes
2 940
3 688
10 217
18 207
22 112
18 485
29 146
39 370
24 710
40 238
37 012
38 460
39 965
41 531
43 159
44 006
44 869
45 750
46 649
47 565
Ex ao dina y E en s
0
0
0
-2 273
0
0
0
0
-1 510
-1 140
0
0
0
0
0
0
0
0
0
0
Ne Income
2 940
3 688
10 217
15 934
22 112
18 485
29 146
39 370
23 200
39 098
37 012
38 460
39 965
41 531
43 159
44 006
44 869
45 750
46 649
47 565
APPENDICES
APPENDIX 1 – INCOME STATEMENT
.
20
Balance Shee
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Asse s
Cash and Cash Equi alen s
11 199
18 434
29 449
41 711
41 114
54 855
61 954
47 998
40 738
65 403
80 509
89 823
99 501
109 557
120 006
131 320
142 856
154 619
166 612
178 840
Accound Recei able, Ne
1678
2559
3993
5832
7587
9518
11335
14039
13466
16169
16824
17482
18166
18878
19618
20003
20395
20796
21204
21621
P epaid Expenses and o he cu en asse s
513
659
959
1 020
1 779
1 852
2 381
4 629
5 345
3 793
4711
4895
5086
5286
5493
5601
5711
5823
5937
6054
To al Cu en Asse s
13 390
21 652
34 401
48 563
50 480
66 225
75 670
66 666
59 549
85 365
102 043
112 200
122 753
133 720
145 116
156 923
168 962
181 237
193 753
206 514
P ope y, Plan & Equipmen
5784
7819
11803
18337
31573
55446
70399
90044
117166
143015
127861
132861
138061
143470
149095
152020
155003
158046
161150
164316
Accumula ed Dep ecia ion
-1817
-2132
-3212
-4616
-6890
-10663
-15418
-20080
-24975
-33134
-28264
-29369
-30519
-31714
-32958
-33604
-34264
-34936
-35623
-36322
Long Te m In esmen s
0
0
0
0
0
86
6 234
6 775
6 201
6 141
6730
6993
7266
7551
7847
8001
8158
8318
8482
8648
Goodwill
17 981
18 026
18 122
18 221
18 301
18 715
19 050
19 197
20 306
20 654
21534
22377
23252
24163
25111
25603
26106
26618
27141
27674
In angibles
3929
3246
2535
1884
1294
894
623
634
897
788
1009
1049
1090
1133
1177
1200
1224
1248
1272
1297
O he Long Te m Asse s
699
796
1312
2135
2576
2673
2758
2751
6583
6794
5384
5594
5813
6041
6278
6401
6526
6655
6785
6919
To al non-cu en Asse s
26576
27755
30560
35961
46854
67151
83646
99321
126178
144258
134254
139504
144965
150643
156549
159621
162753
165948
169207
172532
To al Asse s
39 966
49 407
64 961
84 524
97 334
133 376
159 316
165 987
185 727
229 623
236 297
251 704
267 718
284 363
301 666
316 544
331 715
347 185
362 960
379 046
Liabili ies
Accoun s Payable
378
413
582
770
1361
2249
2424
5135
6107
5712
5384
5594
5813
6041
6278
6401
6526
6655
6785
6919
O he Cu en Liabili ies
446
639
1 084
1 529
2 922
3 613
5 835
7 000
7 116
9 071
8075
8391
8720
9061
9417
9601
9790
9982
10178
10378
No es Payables/Sho - e m Deb
0
201
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Cu en Po . O LT Deb /Capi al Leases
114
7
0
0
0
55
54
75
129
90
108
112
116
121
126
128
131
133
136
138
Cu en Ope a ing Lease Liabili ies
0
0
0
0
0
800
1 023
1 127
1 367
1 623
1480
1538
1599
1661
1726
1760
1795
1830
1866
1903
Acc ued Expenses
486
665
1 209
1 461
2 734
8 336
5 645
7 798
12 307
15 464
12786
13286
13806
14347
14909
15202
15500
15805
16115
16432
To al Cu en Liablili ies
1424
1925
2875
3760
7017
15053
14981
21135
27026
31960
27833
28922
30054
31231
32456
33092
33742
34404
35080
35769
To al Long Te m Deb
119
107
0
0
0
418
469
506
10 481
18 985
19 058
19 084
19 112
19 140
19 170
19 185
19 201
19 217
19 233
19 250
Long e m Deb
0
0
0
0
0
0
0
0
9 923
18 385
18385
18385
18385
18385
18385
18385
18385
18385
18385
18385
Capi al Lease Obliga ions
119
107
0
0
0
418
469
506
558
600
673
699
727
755
785
800
816
832
848
865
De e ed Income Tax
769
163
0
0
673
1039
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Non-Cu en Ope a ing Lease Liabili ies
0
0
0
0
0
9 524
9 631
12 746
15 301
17 226
16487
17132
17803
18500
19225
19603
19987
20380
20780
21188
O he Long Te m Liabili ies
1558
2994
2892
6417
5517
6288
5945
6721
7206
8284
8075
8391
8720
9061
9417
9601
9790
9982
10178
10378
To al Long e m Liabili ies
2 446
3 264
2 892
6 417
6 190
17 269
16 045
19 973
32 988
44 495
43 621
44 608
45 634
46 701
47 812
48 389
48 978
49 578
50 191
50 816
To al Liabili ies
3 870
5 189
5 767
10 177
13 207
32 322
31 026
41 108
60 014
76 455
71 454
73 529
75 688
77 933
80 267
81 481
82 719
83 982
85 271
86 585
Equi y
Addi ional Paid-In Capi al
30 225
34 886
38 227
40 584
42 906
45 851
50 018
55 811
64 444
73 253
74025
76920
79930
83062
86318
88011
89739
91500
93297
95130
Re ained Ea nings (Accumula ed De ici )
6099
9787
21670
33990
41981
55692
77345
69761
64799
82070
92164
102653
113553
124879
136650
148652
160889
173366
186088
199061
O he Equi y
-228
-455
-703
-227
-760
-489
927
-693
-3530
-2155
-1346
-1399
-1453
-1510
-1569
-1600
-1632
-1664
-1696
-1730
To al Equi y
36 096
44 218
59 194
74 347
84 127
101 054
128 290
124 879
125 713
153 168
164 843
178 174
192 030
206 431
221 399
235 063
248 996
263 203
277 689
292 461
To al Liabili ies + Equi y
39 966
49 407
64 961
84 524
97 334
133 376
159 316
165 987
185 727
229 623
236 297
251 704
267 718
284 363
301 666
316 544
331 715
347 185
362 960
379 046
APPENDIX 2 – BALANCE SHEET
21
APPENDIX 3 – REVENUE FORECAST
Ads Re enue Fo ecas
2018
2019
2020
2021
2022
2023
A g 5y
A g 3y
A e age Yea ly Ac i e Use s (in billions)
2,58
2,79
3,16
3,53
3,69
3,91
3,416
3,71
G ow h
-
8,14%
13,26%
11,71%
4,53%
5,96%
8,72%
7,40%
Re enue (in millions)
55013
69655
84169
114934
113642
131948
102870
120175
A e age Re enue pe use ($)
21,32
24,97
26,64
32,56
30,80
33,75
28,34
32,38
FoA Re enue Assump ions
A e age e enue pe use ($)
$
32,38
A e age YAU g ow h o e he 5 i s yea s 4%
A e age YAU g ow h o e he 5 las yea s 2%
FoA Re enue Fo ecas
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
A e age Yea ly Ac i e Use s Fo ecas (in billions)
4,06
4,23
4,40
4,57
4,75
4,85
4,95
5,05
5,15
5,25
Ads Re enue Fo ecas
131590
136854
142328
148021
153942
157021
160161
163364
166632
169964
Reali y Labs Re enue
2019
2020
2021
2022
2023
Reali y Labs Re enue
1042
1796
2995
2967
2954
G ow h
26,30%
72,36%
66,76%
-0,93%
-0,44%
Reali y Labs Re enue Assump ions
Value used in pe pe ui y (in millions) $3000
22
APPENDIX 4 – BETA CALCULATION
APPENDIX 5 – WACC
(1) Re ie ed om Re ini i
(2) Re ie ed om Re ini i
(3) US Co po a e AA E ec i e Yield
(4) US 10 T easu y No e
(5) Re ie ed om Damoda an Websi e
SUMMARY OUTPUT
Reg ession S a is ics
Mul iple R 0,514324439
R Squa e 0,264529628
Adjus ed R Squa e 0,258296828
S anda d E o 0,083792572
Obse a ions 120
ANOVA
d SS MS F Signi icance F
Reg ession 1 0,297990344 0,297990344 42,44154126 1,86914E-09
Residual 118 0,82850103 0,007021195
To al 119 1,126491374
Coe icien s S anda d E o S a P- alue Lowe 95% Uppe 95% Lowe 95,0% Uppe 95,0%
In e cep 0,010111888 0,007867689 1,285242566 0,201224407 -0,005468277 0,025692054 -0,005468277 0,025692054
X Va iable 1 1,106268665 0,169810694 6,514717281 1,86914E-09 0,769997259 1,442540071 0,769997259 1,442540071
Capi al S uc u e
Numbe o Sha es Ou s anding (1) 2200048907
Cu en Ma ke P ice pe sha e (2) 390,14$
Ma ke Value o he i m Equi y 858 327 080 576,98$
Cu en Lease Obliga ion 1 623 000 000
Non-Cu en Lease Obliga ion 17 226 000 000
Long- e m Deb 18 985 000 000
Value o Deb 37 834 000 000,00$
Fi m Value 896 161 080 576,98$
Weigh o Equi y 95,78%
Weigh o Deb 4,41%
Cos o Deb
Cos O Deb (3) 5,05%
Tax Ra e 25,00%
Cos o Equi y
Risk- ee Ra e (4) 4,42%
Ma ke Risk P emium (5) 4,60%
Be a 1,11
CAPM 9,51%
WACC 9,274%
WACC
23
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Ne Income
18 485
29 146
39 370
23 200
39 098
37 012
38 460
39 965
41 531
43 159
44 006
44 869
45 750
46 649
47 565
Plus: D&A
4315
5741
6862
7967
10904
13610
12786
13286
13806
14347
14909
15202
15500
15805
16115
Less: CaPex
-15102
-15115
-18567
-31186
-27045
-27590,97
-28670
-29792
-30959
-32173
-32804
-33448
-34105
-34774
-35458
Less: Change in WC
7250
-2723
700
5683
3836
4038
4196
4360
4531
4708
4801
4895
4991
5089
5189
Unle e ed FCF
74176
75720
78684
81766
84971
86919
88624
90364
92139
93949
WACC
9,27%
9,27%
9,27%
9,27%
9,27%
9,27%
9,27%
9,27%
9,27%
Cumula ed Discoun Pe iod
1
0,92
0,84
0,77
0,70
0,64
0,59
0,54
0,49
0,45
P esen Value o FCF
74176
69294
65894
62664
59593
55786
52053
48570
45321
42289
En e p ise Value
Cumula i e P esen Value o FCF
575639
Te minal Value
g
2%
WACC
9,27%
Te minal Value
1317340
Discoun Fac o
0,450128
PV o Te minal Value
592972
% o EV
0,507416
En e p ise Value
1168611
Implied Equi y Value & Sha e P ice
En e p ise Value
1168611
(Less) Ne Deb
37834
(Plus) Cash and Cash Equi alen s
65 403
Implied Equi y Value
1196180
Sha e Ou s anding
2200,049
Implied Sha e P ice
$ 543,71
APPENDIX 6 – DCF
24
APPENDIX 7 – RELATIVE VALUATION
Iden i ie
(RIC)
Company Name
EV /
Re enues
EV /
EBITDA
EV / EBIT
META.O
Me a Pla o ms Inc
6,92
11,89
17,62
Pee s
GOOGL.OQ
Alphabe Inc
5,77
13,57
18,81
AMZN.OQ
Amazon.com Inc
2,87
12,92
42,51
A e age Mul iple
4,32
13,24
30,66
Me a Pla o ms Inc
134,90
60,19
49,01
Me a Pla o ms Inc
EV
582,93
797,13
1502,41
25
APPENDIX 8 – SWOT ANALYSIS
APPENDIX 9 – COMMITTEE COMPOSITION
S engh s
Weakness
B and Recogni ion and Ma ke Dominance: The
company is one o he mos ecognized b ands globally and
he leade in hei indus y.
S ong Financial Pe o mance: Consis ed e enue
g ow h and p o i abili y, suppo ed by a obus ad e ising
business.
La ge Use Base: Ac oss all o i s pla o ms, billions o
ac i e use s gene a e a as amoun o da a and ad e ising
oppo uni ies.
Financials: The company is e y heal hy inancially, which
can help in u u e oppo uni ies and challenges.
P i acy Conce ns and Regula o y Issues: G owing
egula o y cons ain s and cons an examina ion o da a
p i acy policies may esul in penal ies. These limi a ions
can ha e an e ec on company ope a ions.
Reliance on Ad e ising Income: Since ad e ising
accoun s o a sizable amoun o Me a's e enue, changes
in he ma ke and shi s in he amoun s spen on ad e ising
can impac he company's inancial weal h.
P oblems wi h us and public image: Me a's
epu a ion has been damaged. Ongoing issues wi h da a
misuse and disin o ma ion pe sis . Di icul ies wi h con en
mode a ion u he ha m hei image.
Oppo uni ies
Th ea s
G owing Digi al Ad e ising Ma ke : The con inuous
g ow h o digi al ad e ising, pa icula ly mobile ad e ising,
o e s ongoing e enue oppo uni ies.
Mone iza ion o Wha sApp and Messenge : Fu he
mone izing messaging se ices h ough new ea u es and
business ools can enhance e enue.
In e na ional Ma ke Expansion: Expanding p esence in
eme ging ma ke s wi h g owing in e ne pene a ion.
Inc easing digi al adop ion.
Inno a ion in AI and Machine Lea ning: Le e aging AI
o be e ad a ge ing use engagemen and pla o m
secu i y.
Compe i ion: S ong compe i ion om o he ech gian s
like Google and Apple, as well as he eme gence o la ge
companies en e ing he ad e ising sec o , such as Ube
and Amazon
Regula o y Changes: Fu u e new es ic ions can di icul
he company’s abili y o ope a e e icien ly o he possibili y
o each new ma ke s.
Technological Shi s: The indus y mo es quickly and
he e is a lack o knowledge i he cu en wa e is he e o
s ay. Me a e se is he igh example o his, as he company
ha e in es ed hea ily o s ill be a unp o en concep .
26
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