Valuation model update
Following the Q4 2024 earnings, I updated the valuation model as shown in the table below.
I have considered the following;
- FX headwind during the quarter and potentially throughout 2025. Management is guiding for 3% in Q1 while I had projected around 6%.
- Management guided for total expenses that’s around $5 billion higher than that expected by analysts. However, like in 2024, I don’t expect Meta to exceed the mid-point of its guidance ($114-$119 billion).
- I expect growth in total expenses in 2026 to be lower than in 2025 due to continued efficiency gains and maturity of AI investments.