Daniel PronkANALYSTJul 29, 2026“META is deeply undervalued at ~16x P/E and ~10x P/OCF despite strong revenue growth, accelerating ad metrics, and improving efficiencies — the post-earnings selloff is overdone and the stock looks cheap.”
Why he says it — point by point
FAVORABLE & AGAINST · BOTH KEPTWhy
revenue increased by 28%
advertising business is firing on all cylinders and showing significant growth
A 16 price to earnings ratio for one of the highest quality businesses in the world that is still growing its revenues by about 25% per year. Just on that basis alone, I think that Meta is looking pretty dang cheap.
operating cash flow is up 24.6% for the second quarter on a year-over-year basis. Year-to-date operating cash flow is up 29%
the expenses as a percentage of revenue should come back down, which will also lead to earnings and operating income continuing to grow in future quarters.
they increased their low-end CapEx guide by about 5 billion, but they did not increase the top end of their CapEx guide like Google did. And I do think that this is a good thing to see right now.
it seems like Meta's underlying business is getting much more efficient and the revenue per employee is growing significantly.
Risk
Meta's free cash flows are declining and almost negative just like what Google reported in this quarter. So, CapEx is causing these businesses to produce almost negative free cash flow now. And this is another thing that I think the market did not like.
The structured call
The receipt
Publish-day price $$585.61 · the claim is anchored to the moment it was said.
