The 3 scenario framework is a smart aproach for a stock like META where the terminal value assumtions really drive the outcome. I think the base case 3.5% terminal growth is reasonable given they're already at 20%+ user penetration globally. WhatsApp monetization could be the wildcard that pushes toward the bul case, but your 50/30/20 probability weighting seems fair. The 14.5% upside doesn't scream bargain territory especialy considering execution risk.
Clean framework. One fix: your terminal (g=3.5%, ROIC=16%) implies ~22% retention (g/ROIC). If AI capex keeps retention higher, base FCF/payout is lower → fair value compresses.
Your adjustment is perfectly reasonable. Intense CAPEX and not-so-juicy-as-ads revenue streams might indeed drive retention higher. So I probably went even easier on META here than I thought. That reinforces the main point even further: not every Mag 7 dip is worth buying.
We’re aligned. Higher retention is fine if it buys higher ROIC. If it doesn’t, it’s a tax on FCF and the multiple should mean-revert. Show me incremental ROIC, then I’ll change my stance.
The 3 scenario framework is a smart aproach for a stock like META where the terminal value assumtions really drive the outcome. I think the base case 3.5% terminal growth is reasonable given they're already at 20%+ user penetration globally. WhatsApp monetization could be the wildcard that pushes toward the bul case, but your 50/30/20 probability weighting seems fair. The 14.5% upside doesn't scream bargain territory especialy considering execution risk.
Clean framework. One fix: your terminal (g=3.5%, ROIC=16%) implies ~22% retention (g/ROIC). If AI capex keeps retention higher, base FCF/payout is lower → fair value compresses.
Your adjustment is perfectly reasonable. Intense CAPEX and not-so-juicy-as-ads revenue streams might indeed drive retention higher. So I probably went even easier on META here than I thought. That reinforces the main point even further: not every Mag 7 dip is worth buying.
We’re aligned. Higher retention is fine if it buys higher ROIC. If it doesn’t, it’s a tax on FCF and the multiple should mean-revert. Show me incremental ROIC, then I’ll change my stance.