William Blair Reaffirms Outperform on Meta

William Blair analyst Ralph Schackart reiterated an Outperform rating on Meta Platforms Inc. (NASDAQ: META).

“Our take and stock thoughts. This offering is a continuum of the substantial capital needed to succeed in the AI race and to build out AI infrastructure, in our view.

The roughly $35B in initial financing and planned $60B ATM significantly expand Meta’s funding flexibility alongside its substantial operating cash flow and investment-grade debt capacity.

However, we expect investors to continue to question the financing and potential for future capital raises.

Overall, we believe the financing reinforces both Meta’s confidence in the long-term returns from AI investment and the increasingly capital-intensive nature of pursuing that opportunity.

We believe that Meta will ultimately produce a profitable AI business and its returns longer-term should help the company diversify, although the path may not be linear.

Using our DCF framework, we believe the stock has roughly mid- to upper-20% upside over the next 12 months using a 12% discount rate and 11-times EBITDA multiple.

Risks include privacy concerns, increasing regulatory scrutiny, stalling user growth, artificial intelligence, macro advertising spend pullback, and slowing engagement.

We maintain our Outperform rating.”

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