Meta platforms inc. - equity report : the shift towards web 3.0 - the social media giant´s dominant place in the industry

Abstract

The following research paper, in combination with the annexed equity report, aims at providing a fair value of META Platforms Inc. as of the 31st December 2023. Meta is a business technology, software, and social media company dominating the industry. Despite their large market share, Meta has recently failed to meet expectations and saw a YTD 65% decrease in its share price. In this paper, the source and the justifiability of the sudden fall Meta will be analyzed before a projection based on the present value of future discounted cash flows will be presented. The report consists of providing a current overview of the company and business model, its position in the digital advertising, (social) media & entertainment, and metaverse industry, the potential value drivers that could drive or hinder the performance of the company, and eventually a valuation based on the DCF model. We see Meta’s future performance driven by an ever-growing user base, the monetization of its messaging apps, and the materialization of the metaverse. Simultaneously, Meta is facing key risks threatening its performance such as Apple’s dominant influence over tech companies, the growth in competitors such as TikTok and Amazon, and an over-investment in the metaverse. After a thorough evaluation of the risks and opportunities Meta is opposed to, we issue a BUY recommendation for the stock with a target price of $167.86 on 31st of December 2023, yielding a potential return of 38.05% to its current share price of $121.59.