Is Now the Right Moment to Reassess Meta Stock After 40% Surge Into 2025?

If you are wrestling with what to do about Meta Platforms stock right now, you are definitely not alone. In an environment where tech giants seem to headline every market conversation, it is easy to wonder whether Meta's incredible journey has more room to run or if it's time for caution. Over just the last month, the stock has pushed nearly 5% higher, and if you zoom out to the last year, the gains swell to an impressive 40%. Even more staggering, anyone who held on for three years has now seen more than a 360% total return.

But these headline numbers only tell part of the story. Underneath Meta's soaring share price are signals that growth expectations and risk perceptions are shifting. For instance, market analysts' price targets still stand well above recent closes, suggesting almost 15% potential upside from here. Meanwhile, the stock's current price is trading at around a 29% discount to its calculated intrinsic value, which is a serious eyebrow-raiser for anyone focused on valuation.

When we look at Meta using a standard six-point undervaluation checklist, it scores a 4. This means it checks four out of six boxes for being undervalued. That leaves the company in a sweet spot for investors who care about both growth and value, but it also leaves some room for nuance.

So how does Meta really stack up when we dig into the numbers behind its price tag? In the next section, we will break down the key valuation approaches most investors use today, and hint at an even more effective way to understand Meta's true worth at the end of the article.

Meta Platforms delivered 40.2% returns over the last year. See how this stacks up to the rest of the Interactive Media and Services industry.

Approach 1: Meta Platforms Cash Flows

The Discounted Cash Flow, or DCF, model is a classic way investors estimate what a company is really worth. It works by projecting Meta Platforms’ future cash flows and then discounting them back to today’s dollars to arrive at an intrinsic value for the stock.

Right now, Meta generates an impressive $57.63 billion in free cash flow. Analyst projections suggest this could rise to more than $198.64 billion by 2035, with a steady growth trajectory projected over the next decade. Using a two-stage Free Cash Flow to Equity model, the DCF calculation estimates the intrinsic value of Meta Platforms at around $1,052.92 per share.

Compared to its recent trading levels, this figure suggests Meta is approximately 29% undervalued according to this cash flow analysis. In simple terms, the stock’s market price is well below what its future earnings potential indicates it could be worth.

Result: UNDERVALUED

Our DCF analysis suggests Meta Platforms is undervalued by 29.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: Meta Platforms Price vs Earnings

For profitable companies like Meta Platforms, the Price-to-Earnings (PE) ratio is one of the most relied upon benchmarks in stock valuation. The PE ratio shows how much the market is willing to pay today for a dollar of current earnings. This makes it especially useful for understanding investor expectations and comparing companies with similar profitability.

What is considered a “normal” or “fair” PE ratio depends on factors such as growth prospects and perceived risks. Companies with higher expected earnings growth or lower risk usually have higher PE ratios, while those facing uncertainties or slower growth often trade at a discount. It is important to consider context, so comparing Meta’s multiple with its peers and the broader industry is essential.

Currently, Meta trades at a PE ratio of 26.27x. This is well above the Interactive Media and Services industry average of 13.12x, but below the average of its direct peers at 35.47x. Simply Wall St’s proprietary Fair Ratio for Meta, which is calculated based on earnings growth, risk profile, and sector factors, is 32.00x. Since this Fair Ratio is moderately higher than Meta’s current PE, the stock appears undervalued on this basis and the market might not be fully pricing in Meta’s earnings outlook.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Meta Platforms Narrative

Beyond crunching numbers, Narratives offer a smarter, more dynamic way to invest by letting you define the story you believe about a company’s future and directly link it to your own financial forecast and fair value estimate.

A Narrative brings together your perspective on where Meta is headed, connects it to specific forecasts such as revenue growth, profit margins, and risk factors, and translates those assumptions into a fair value. This lets you clearly see if the current price matches your outlook.

On the Simply Wall St platform, Narratives are easy to build and compare with a community of millions. This provides a practical tool to decide if it is time to buy, sell, or hold by tracking the gap between your Fair Value and the market’s Price.

Because Narratives are updated as soon as new information arrives, such as quarterly earnings or breaking news, you can instantly see how your investment thesis holds up as conditions change. This makes your strategy much more adaptable.

For example, one Narrative pegs Meta’s fair value at over $1,086 per share on robust long-term AI growth, while another puts it at $527. Your decision can be based on the story you believe most, and it can be updated any time as new information comes in.

For Meta Platforms, however, we will make it really easy for you with previews of two leading Meta Platforms Narratives: 🐂 Meta Platforms Bull Case

• Fair value: $861.06
• Undervalued by approximately 13.2%
• Projected revenue growth: 15.5%

• AI-driven personalization and new ad formats are boosting engagement and diversifying revenue streams across Meta’s platforms.
• Expanding digital advertising and commerce, along with the company’s platform advantages, are expected to support durable revenue growth and improved monetization.
• Risks remain around high spending on AI and metaverse, regulatory headwinds, and uncertainty in long-term monetization. Analysts’ consensus price target is notably above today’s share price.

🐻 Meta Platforms Bear Case

• Fair value: $538.09
• Overvalued by approximately 38.2%
• Projected revenue growth: 10.5%

• Meta is expected to grow earnings through new products, AI, and continued advertising momentum. Profit will rely heavily on achieving cost efficiencies and hardware success in AR/VR.
• Key risks include heavy reliance on ad revenue, execution challenges in the metaverse and AR/VR, and increased regulatory scrutiny, especially around privacy and antitrust issues.
• Bullish assumptions depend on successful product launches and a leaner, more efficient organizational structure outpacing past spending trends.

Do you think there's more to the story for Meta Platforms? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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