The answer first
Family of Apps remains an excellent advertising cash engine. The corrected DCF prices infrastructure reinvestment, taxes, working capital, SBC, Reality Labs losses, and terminal reinvestment directly.
Original weighted value, historical: $686.25. Revised active value: $787.41.
Company specific valuation method
Primary: enterprise unlevered free cash flow DCF. Ten annual UFCFs plus terminal value are discounted at scenario WACC. Current net cash is added. Current diluted shares are used.
Cross checks: normalized 2027 EPS and P/E, and Family of Apps plus Reality Labs SOTP. Cross checks are not averaged.
SBC stays in EBIT. Buybacks receive no separate value credit. Capex remains above depreciation in terminal states.
Revised scenarios
| Scenario | Probability | WACC | Terminal growth | Year ten revenue | Year ten EBIT margin | Year ten capex | Target | Return |
|---|---|---|---|---|---|---|---|---|
| Bear | 25% | 10.5% | 2.5% | $419.1B | 32% | 21% | $241.51 | -55.8% |
| Base | 55% | 9.0% | 3.0% | $561.6B | 44% | 16% | $757.01 | 38.7% |
| Bull | 20% | 8.0% | 3.5% | $714.0B | 50% | 13% | $1553.38 | 184.6% |
Weighted scorecard
| Pillar | Weight | Original | Revised |
|---|---|---|---|
| Business Quality | 30% | 7.9 | 7.9 |
| Management Quality | 15% | 6.0 | 6.0 |
| Industry Tailwind | 15% | 8.2 | 8.2 |
| Valuation and Margin of Safety | 30% | 7.2 | 7.2 |
| Risk and Asymmetry | 10% | 6.5 | 6.5 |
| Conviction | 7.310 | 7.310 |
No pillar crosses a rubric band. Rule R2 risk review is documented.
Primary financial evidence
| Period | Revenue | Operating income | OCF | Cash capex | Lease principal | FCF after leases |
|---|---|---|---|---|---|---|
| FY2023 | $134.902B | $46.751B | $71.113B | $27.045B | $1.058B | $43.010B |
| FY2024 | $164.501B | $69.380B | $91.328B | $37.256B | $1.969B | $52.103B |
| FY2025 | $200.966B | $83.276B | $115.800B | $69.691B | $2.524B | $43.585B |
| H1 2025 | $89.830B | $37.997B | $49.587B | $29.479B | $1.225B | $18.883B |
| H1 2026 | $117.111B | $41.647B | $64.088B | $49.113B | $1.805B | $13.170B |
| TTM 2026-06-30 | $228.247B | $86.926B | $130.301B | $89.325B | $3.104B | $37.872B |
Downloads
Revised initial assessment
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Revised deep teaching report
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Original versus revised
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Formula driven workbook
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Verified workspace
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Revision manifest
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Original initial assessment
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Original deep teaching report
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Original workbook
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Original workspace
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