Stock Analysis on Net

Meta Platforms Inc. (NASDAQ:META)

$24.99

Economic Value Added (EVA)

Microsoft Excel

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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

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Economic Profit

Meta Platforms Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =


Net Operating Profit After Taxes (NOPAT)
The NOPAT exhibits significant variability across the periods. There was a substantial increase from 27,980 million USD in 2020 to 40,147 million USD in 2021. This was followed by a considerable decline to 20,828 million USD in 2022. However, the profit rebounded strongly in 2023, reaching 38,290 million USD, and continued its upward trajectory in 2024, achieving 56,844 million USD.
Cost of Capital
The cost of capital remains relatively stable over the five-year period, fluctuating mildly between 15.93% and 16.42%. The slight variations do not indicate any major shifts in the company's capital costs.
Invested Capital
The invested capital shows a consistent upward trend, increasing from 80,951 million USD in 2020 to 165,969 million USD in 2024. This steady growth suggests ongoing investments or capital allocation to support business operations or expansion.
Economic Profit
Economic profit displays considerable fluctuations. It increased markedly from 14,686 million USD in 2020 to 25,005 million USD in 2021, declined sharply to 4,616 million USD in 2022, then recovered to 15,363 million USD in 2023, and further increased to 29,827 million USD in 2024. The pattern generally aligns with the trend observed in NOPAT, indicating that changes in operating profit strongly influence economic profit outcomes despite relatively constant cost of capital.
Overall Analysis
The company demonstrates positive growth in both invested capital and economic profit over the analyzed period, with some volatility observed in profitability figures particularly in 2022. The stability in the cost of capital suggests that external financing conditions remained consistent. The rebound in NOPAT and economic profit after 2022 indicates a recovery or successful strategic initiatives that improved financial performance. Increased invested capital supports this potential growth strategy, reflecting confidence in future returns.

Net Operating Profit after Taxes (NOPAT)

Meta Platforms Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income
Deferred income tax expense (benefit)1
Increase (decrease) in deferred revenue2
Increase (decrease) in accrued severance and other personnel liabilities3
Increase (decrease) in equity equivalents4
Interest expense
Interest expense, operating lease liability5
Adjusted interest expense
Tax benefit of interest expense6
Adjusted interest expense, after taxes7
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income8
Investment income, after taxes9
Net operating profit after taxes (NOPAT)

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in deferred revenue.

3 Addition of increase (decrease) in accrued severance and other personnel liabilities.

4 Addition of increase (decrease) in equity equivalents to net income.

5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

7 Addition of after taxes interest expense to net income.

8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

9 Elimination of after taxes investment income.


Net Income
The net income demonstrates variability over the analyzed period. It increased significantly from 29,146 million US dollars in 2020 to 39,370 million US dollars in 2021. However, in 2022, there is a notable decline to 23,200 million US dollars. This downward trend reverses in 2023, with net income rising sharply to 39,098 million US dollars and continuing the upward trajectory to reach 62,360 million US dollars in 2024. Overall, the trend reflects periods of both volatility and robust growth, culminating in a substantial increase by the end of the period.
Net Operating Profit After Taxes (NOPAT)
NOPAT follows a similar pattern to net income, with an increase from 27,980 million US dollars in 2020 to 40,147 million US dollars in 2021. Subsequently, it decreases to 20,828 million US dollars in 2022, which aligns with the downturn observed in net income for the same year. In 2023, NOPAT recovers significantly to 38,290 million US dollars, and continues to improve, reaching 56,844 million US dollars in 2024. This trend suggests operational profitability experienced fluctuations but ultimately improved substantially by the end of the period, indicating enhanced operational efficiency or favorable business conditions in the latter years.

Cash Operating Taxes

Meta Platforms Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Provision for income taxes
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense
Less: Tax imposed on investment income
Cash operating taxes

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).


Provision for Income Taxes
The provision for income taxes exhibited a fluctuating trend over the analyzed periods. It increased significantly from 4,034 million US dollars in 2020 to 7,914 million US dollars in 2021, indicating higher estimated tax obligations. Subsequently, it declined to 5,619 million in 2022, showing a reduction in estimated tax expense. However, the provision rose again to 8,330 million in 2023 and slightly decreased to 8,303 million in 2024, stabilizing at a higher level compared to earlier years. This pattern suggests variability in taxable income or changes in tax regulations impacting the company's tax liabilities.
Cash Operating Taxes
Cash operating taxes demonstrated an overall upward trajectory with some volatility. Beginning at 4,959 million US dollars in 2020, the cash taxes paid increased to 7,290 million in 2021. An increase continued in 2022 reaching 8,950 million, followed by a decrease to 8,095 million in 2023. In 2024, cash operating taxes rose sharply to 12,827 million, marking the highest value in the series. The sharp increase in the final period suggests stronger cash outflows related to tax payments, possibly due to tax timing differences, higher taxable income, or changes in tax payment schedules.
Comparative Observations
While the provision for income taxes reflects estimated tax expenses, cash operating taxes represent actual cash paid. The data shows instances where cash taxes surpassed the provision, notably in 2022 and 2024, which may point to timing differences or adjustments based on prior estimates. The significant rise in cash operating taxes in 2024 contrasts with the relatively stable provision, highlighting a potential shift in cash tax management or tax obligations becoming due. Overall, the tax-related expenses and payments show variability but an increasing trend, especially on a cash basis, which could affect the company's liquidity and cash flow management.

Invested Capital

Meta Platforms Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Finance lease liabilities, current
Long-term debt
Finance lease liabilities, non-current
Operating lease liability1
Total reported debt & leases
Stockholders’ equity
Net deferred tax (assets) liabilities2
Deferred revenue3
Accrued severance and other personnel liabilities4
Equity equivalents5
Accumulated other comprehensive (income) loss, net of tax6
Adjusted stockholders’ equity
Construction in progress7
Marketable securities8
Invested capital

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of deferred revenue.

4 Addition of accrued severance and other personnel liabilities.

5 Addition of equity equivalents to stockholders’ equity.

6 Removal of accumulated other comprehensive income.

7 Subtraction of construction in progress.

8 Subtraction of marketable securities.


The financial data reveals notable trends in the company’s leverage, equity base, and invested capital over the five-year period from 2020 to 2024.

Total Reported Debt & Leases
This item exhibits a substantial and accelerating increase over the years. From $11,177 million in 2020, the debt and leases almost doubled by 2022 to $27,278 million and then continued to rise sharply to reach $49,769 million in 2024. This trend indicates a significant expansion in the company's liabilities, suggesting increased borrowing or leasing commitments, which could be aimed at financing growth, acquisitions, or capital expenditures.
Stockholders’ Equity
Stockholders' equity shows some fluctuations initially, with a slight decrease from $128,290 million in 2020 to $124,879 million in 2021, then a small rise to $125,713 million in 2022. From 2022 onwards, there is a strong upward trend, culminating in a value of $182,637 million in 2024. This pattern reflects an overall strengthening in the company’s net asset base, which may result from retained earnings growth, successful profitability, or equity issuances.
Invested Capital
Invested capital consistently grows over the period, increasing from $80,951 million in 2020 to $165,969 million in 2024. The growth pace accelerates especially after 2021, indicating that the company is increasing its long-term investments and assets base substantially. This could correspond with strategic initiatives to enhance operational capacity, assets acquisition, or overall expansion.

Overall, the data illustrates a company that is increasing its financial leverage considerably while simultaneously growing its equity base and invested capital. This combination may suggest an aggressive growth strategy supported by both debt financing and equity strength, potentially positioning the company for expanded operations or investment in new opportunities. However, the rising debt levels also imply greater financial risk that should be managed carefully.


Cost of Capital

Meta Platforms Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2024-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Long-term debt and finance lease liabilities. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Meta Platforms Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Alphabet Inc.
Comcast Corp.
Netflix Inc.
Take-Two Interactive Software Inc.
Walt Disney Co.

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.


Economic Profit Trends
The economic profit exhibited significant fluctuations over the five-year period. It initially increased sharply from 14,686 million US dollars in 2020 to 25,005 million US dollars in 2021. However, a sharp decline followed in 2022, dropping to 4,616 million US dollars. The metric then recovered substantially in the subsequent years, reaching 15,363 million in 2023 and further rising to 29,827 million US dollars in 2024, surpassing previous peak levels.
Invested Capital Trends
Invested capital demonstrated a consistent and steady upward trajectory throughout the period. Starting at 80,951 million US dollars in 2020, it increased annually, reaching 92,809 million in 2021, 101,764 million in 2022, 141,324 million in 2023, and 165,969 million US dollars by the end of 2024. The growth in invested capital indicates ongoing substantial investment and expansion within the company.
Economic Spread Ratio Trends
The economic spread ratio, which measures the efficiency of invested capital in generating economic profit, showed notable volatility. It peaked at 26.94% in 2021, reflecting a highly efficient use of capital during that year. In 2022, this ratio dropped sharply to 4.54%, indicating a significant decrease in capital efficiency. In the following years, it improved steadily to 10.87% in 2023 and 17.97% in 2024, approaching levels observed early in the period but still below the 2021 high.
Overall Insights
The data reveals a pattern of initial growth and efficiency improvement up to 2021, followed by a contraction in 2022 across economic profit and economic spread ratio, despite ongoing growth in invested capital. The recovery in 2023 and 2024 suggests successful strategic or operational adjustments, leading to improved profitability and capital efficiency. The continuous increase in invested capital throughout indicates a long-term commitment to growth and expansion, although returns on this capital varied significantly during the period.

Economic Profit Margin

Meta Platforms Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
 
Revenue
Add: Increase (decrease) in deferred revenue
Adjusted revenue
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Alphabet Inc.
Comcast Corp.
Netflix Inc.
Take-Two Interactive Software Inc.
Walt Disney Co.

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × ÷ =

3 Click competitor name to see calculations.


Economic Profit
The economic profit exhibits considerable fluctuations over the periods analyzed. Starting at 14,686 million US dollars in 2020, there is a significant increase to 25,005 million in 2021. However, the profit sharply declines in 2022 to 4,616 million US dollars. The following years show recovery, with economic profit rising again to 15,363 million in 2023 and reaching the highest value in the series at 29,827 million in 2024. This pattern indicates volatility with a notable dip in 2022 followed by a marked recovery and growth.
Adjusted Revenue
Adjusted revenue presents a generally upward trend with some periods of slight decline. Beginning at 86,066 million US dollars in 2020, revenue increases substantially to 118,154 million in 2021. A minor decrease occurs in 2022, dropping slightly to 116,539 million. Subsequently, the revenue resumes its growth trajectory, climbing to 135,051 million in 2023 and 164,598 million in 2024, indicating overall strong top-line growth despite the minor 2022 downturn.
Economic Profit Margin
The economic profit margin follows a trend that mirrors economic profit movements but with different intensities. From 17.06% in 2020, it improves to 21.16% in 2021, indicating higher profitability efficiency relative to revenue. In 2022, the margin plunges to 3.96%, reflecting the sharp decline in economic profit. By 2023, the margin recovers to 11.38%, and in 2024 it further increases to 18.12%. This suggests that after an adverse period, profitability margins have improved notably but have not yet surpassed the peak margin of 2021.