Our target price of $915 is based on ~25x our 2027E GAAP EPS of $36.04 and implies ~14x our 2027E EV/EBITDA. We justify our valuation methodology based on Meta’s user scale, growing engagement, product super cycle and AI opportunity, ads innovation, revenue growth, and improving profitability. Engagement is benefiting from Meta’s AI investments as monetization increases at Reels and potential for greater demand from Advantage+ Sales, C2M, and Click-to-WhatsApp as we believe Meta is a more efficient organization overall.

Risks to our target price include: 1) Impacts from changes to ATT and IDFA could prove more difficult to overcome and structurally impact Meta’s advertising business; 2) Online advertising spend could decelerate faster than we anticipate; 3) Competition could prove to be more impactful than we anticipate; 4) Meta may not be able to achieve meaningful contributions from its investments in non-advertising businesses (metaverse). 5) Adverse economic and/or consumer spending trends could hinder advertising spend; and 6) Regulatory pressures on anti-trust, data, and privacy practices could adversely impact on performance.