Meta Platforms (META) shares have seen a slight dip of 0.7% in recent trading. While there is no major news event triggering the move, investors appear to be reassessing valuations following the stock’s strong gains over the past year.

See our latest analysis for Meta Platforms.

Meta’s recent pullback comes after a remarkable run over the past three years, with a total shareholder return of over 435%. While recent weeks have seen some momentum fading, investors remain focused on the company’s growth outlook and evolving valuation as it recalibrates from last year’s highs.

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With shares now trading about 40% below the average analyst price target, the key question is whether Meta is truly undervalued at these levels or if future growth has already been factored into the stock price.

Meta Platforms’ most widely followed valuation view points to a fair value hundreds of dollars above the recent closing price, on the basis of robust long-term forecasts and new product monetization. This gap is stirring debate over whether market pessimism has left significant upside on the table.

Advances in AI-driven ad targeting and content delivery are significantly improving ad performance and personalization, with Meta reporting material increases in ad conversions (e.g., 5% more on Instagram, 3% on Facebook) and advertiser ROI, suggesting the company’s ongoing investments will further boost revenue growth and operating leverage over the long term.

Read the complete narrative.

Want to unlock the numbers behind that bold price target? Hidden in the narrative are growth projections and margin assumptions rarely seen in big tech. Discover the aggressive financial roadmap that powers this premium valuation. Explore what is fueling the optimism, and how Meta’s future earnings could justify it.

Result: Fair Value of $841.42 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, rising AI infrastructure costs or further regulatory hurdles in Europe could challenge the bullish outlook and could impact Meta’s long-term growth narrative.

Find out about the key risks to this Meta Platforms narrative.

Instead of focusing on long-term earnings forecasts, some investors look at valuation using the price-to-earnings ratio. Meta trades at 25.7x, which is higher than the US industry average of 16.4x but below the peer average of 36.1x. The fair ratio stands even higher at 40x, so there is a spread between what the market pays and what it could. Does this premium signal opportunity, or added risk if growth slows?