Good morning investors!
Welcome to our latest “Deep Dive” — a high level, easy to follow stock analysis designed to give our Edge+ members an EDGE when it comes to properly valuing a company. We do the heavy lifting so you can make more sound investing decisions.
Today’s deep dive target is META — one of the largest advertisers and social media platforms on the market today.
In today’s article we will look at the company’s performance, recent results, and dive deeper into its valuation to determine whether the stock is a BUY, SELL, or HOLD, based on our opinion alone.
Alright, grab your coffee and let’s dive in.
Company Background
Meta Platforms (META) is one of the world’s largest digital advertising and social media companies, operating a family of apps that includes Facebook, Instagram, WhatsApp, and Messenger. The company connects more than three billion people globally through its platforms, giving it one of the most powerful advertising ecosystems in the world. Meta generates the vast majority of its revenue from targeted digital ads, leveraging user data, AI-driven algorithms, and engagement tools to help businesses reach customers efficiently and at scale.
Beyond advertising, Meta has been aggressively investing in artificial intelligence and immersive technologies to drive its next phase of growth. AI is improving ad performance, content recommendations, and automation across its platforms, helping increase user engagement and advertiser returns. At the same time, Meta is building its long-term vision around virtual and augmented reality through its Reality Labs division, which develops products like the Quest headsets and smart glasses, aiming to position the company at the center of the future “metaverse.”
While Meta benefits from strong cash flow, global scale, and powerful network effects, it also faces risks including regulatory scrutiny, privacy concerns, competition from platforms like TikTok, and heavy spending on Reality Labs initiatives. Still, its dominant position in digital advertising, expanding AI capabilities, and massive user base make Meta a core player in the global tech and media landscape with significant long-term growth potential.
This deep dive explores why Meta Platforms, even with the huge amount of spending, is still a quality buy at current prices.
Edge Score
We have been diligently working behind the scenes to develop several stock analysis systems for our members, including The Edge Scoring System.
The system takes tons of data and provides a score for 5 different metrics:
Valuation
Future Growth Projections
Past Performance
Financial Health
Dividend
The system then takes these five metrics and provides an overall rating for the stock, which we refer to as the Edge Score.
Here is our full Edge Score for Meta:
Below, we will further break down each category and share our methodology for scoring for this company.
Source of Revenue
Meta is fundamentally an advertising business, with smaller but growing bets in hardware, subscriptions, and virtual/augmented reality.
👉 Roughly 97–98% of revenue still comes from ads.
Let’s break it down by segment:
1️⃣ Advertising Revenue (Core Engine — ~98%)
This is Meta’s money printer.
Meta sells digital ad space across:
Facebook
Instagram
Messenger
WhatsApp (limited today, expanding)
Reels
Stories
Feed placements
2️⃣ Reality Labs (Hardware + VR/AR)
This is Meta’s future bet, but currently small revenue.
Products include:
Quest VR headsets
Smart glasses
Metaverse software/platforms
Revenue sources:
Hardware sales
Digital app store purchases
VR games/content
Accessories
Important:
Reality Labs typically runs at large losses.
Meta is spending billions annually to:
Build the metaverse
Develop AR/VR ecosystems
Own next-gen computing platforms
Today: revenue small
Tomorrow: potential massive optionality
Segment Summary (Simple View)
If META earns $100:
~$97–98 → Ads
~$2–3 → Reality Labs + Other
Why This Model Is Attractive
Strengths
✅ Extremely high margins
✅ Scales with users
✅ Network effects
✅ Recurring advertiser demand
✅ Cash flow machine
Risks
⚠️ Ad market cyclicality
⚠️ Privacy regulation
⚠️ Competition (TikTok, YouTube)
⚠️ Heavy Reality Labs spending
Past Performance
In this section we will go over the company’s recent earnings results and dive into their financial performance over the last few years.
Stock Price History
$META has been a laggard when compared to other Mag 7 stocks, but has been finding its footing of late. The stock is now…
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Thank you for joining us for this Deep Dive of Meta Platforms.
If you enjoyed this deep dive, be sure to LEAVE A COMMENT. We look forward to hearing your thoughts on META and our analysis. And let us know what stocks you want to see in the future.
Thank you, and until next time investors!
Mark & Chris
The Stock Investor’s Edge
Disclosure
This deep dive is for educational and informational purposes only. The authors are NOT financial advisors, thus cannot recommend for you to personally to buy or sell any positions. Positions taken on a particular stock are opinions of the authors and only the authors. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.
