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Amid Legal Battles, What Should Investors Do With Meta Stock?

Parkev Tatevosian, CFA•Aug 25, 2026

Summary

Parkev analyzes Meta Platforms' current business health in light of a legal trial regarding its impact on younger users. Parkev highlights that Meta's investments in artificial intelligence have successfully accelerated revenue growth to 28-33% in recent quarters. Despite the metaverse being a capital-intensive failure so far, Parkev notes that Meta remains an effective capital allocator with a return on invested capital (22.8%) that significantly exceeds its cost of capital (10.7%).

While Parkev lowered free cash flow estimates due to increased AI capital expenditures—forecasting negative cash flow in 2026 and 2027—the overall thesis remains bullish. Parkev calculates a fair value of $700 per share, providing a significant margin of safety from the current $550 price level. Parkev believes this $150 gap is sufficient to absorb a potential legal penalty of $5 billion to $10 billion without breaking the investment thesis.

**META (Meta Platforms):** Parkev views the stock as significantly undervalued with a 27% upside potential over the next 12 to 18 months. Parkev points to the robust 38% operating profit margin and a historically low forward P/E ratio of 15.9 as key indicators of value. Parkev sets a fair value estimate of $700, noting that anything significantly below this provides enough room to absorb the shocks of potential negative court outcomes.

Mentioned Stocks

META
Sentiment: BUYAction: RECOMMENDED

Reasoning: Parkev provides a fair value estimate of $700 per share, which is well above the current market price of $550, implying 27% upside. He justifies this through Meta's 38% operating margin, its ability to 10x revenue over the last decade, and its attractive forward P/E ratio of 15.9. Parkev believes the stock's undervaluation offers a buffer against a potential $5-$10 billion negative outcome in its ongoing court case.

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