Key Points
- Meta beat Q3 revenue and Q4 guidance expectations on Oct. 21, but its GAAP operating margin fell sharply and free cash flow turned negative.
- Most Wall Street analysts raised price targets after the report, pushing the average new target to about $858, implying roughly 30% upside from current levels.
- Meta made bullish claims about its Muse AI agent, with analysts at Citibank and Deutsche Bank projecting billions of dollars in revenue by 2030.
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On Oct. 21, Meta Platforms (NASDAQ: META)delivered beats on both Q3 revenue and Q4 guidance, while issuing a minimal increase to its 2026 capital expenditure (CapEx) forecast. The company also made highly bullish statements on the outlook for its Muse personal AI agent.
However, GAAP operating margin plunged from 40% in the prior year’s quarter to 20%, and the company posted negative free cash flow.
While Meta’s report contained clear positives and negatives, Wall Street analysts appear pleased by the Magnificent Seven company’s results.
Price targets updated after the company’s report point to significant upside ahead, with many analysts believing the stock will hit new all-time highs.
Meta Sees Several Large Price Target Boosts, Analysts Eye Over 30% Upside
META shares rose moderately in after-hours trading on the day of the company’s report. However, the market swiftly reversed this move in the next full trading day, causing shares to close down approximately 7%. This suggests that investors were much less keen on Meta’s results than the initial reaction indicated.
Nonetheless, Wall Street analysts generally took a positive view on the company's results, with many analysts raising their price targets in response. Notably, MarketBeat tracked just a handful of analysts that lowered their targets, including TD Cowen, Piper Sandler and Wells Fargo. Still, these decreases were relatively small, ranging from $5 to $25.
On the other hand, BMO, Susquehanna, Mizuho, DA Davidson and Barclays increased their targets the most, each doing so by at least $100. Among all new price targets tracked by MarketBeat after Meta’s earnings report, the average was approximately $858. This is solidly higher than the MarketBeat consensus price target of $833. These two figures imply upside of 30% to 35%. Meta now has 50 Buy Ratings, eight Hold ratings and zero Sell ratings.
The range of Meta price targets remains relatively wide. Scotiabank’s $650 target was the lowest among post-earnings updates, although it still implies slight upside in Meta shares. Although Wells Fargo lowered its forecast, its $995 target was the highest among post-earnings updates, implying upside in the mid-50% range. Additionally, more than 15 updated targets sit at $800 or higher, implying that Meta stock will eclipse its all-time high closing price of $786.80.
Breaking Down Meta’s Bullish Takes on Muse
Meta’s statements around Muse’s revenue potential warrant significant attention. The company noted that its average Family of Apps (FOA) revenue per American user is several hundred dollars annually. This is basically Meta’s advertising revenue per American user, with advertising accounting for 98.3% of total FOA revenue last quarter. The potentially game-changing expectation is that Meta believes Muse will eventually achieve even higher revenue per American user. That is really saying something, as Meta has built one of the most powerful advertising systems in the world, yet it believes Muse could eventually drive sales that exceed this on a per-user basis.
‘Per user’ is the critical term. Sure, in just 1.5 weeks, Muse saw 10 million downloads. However, that is a drop in the bucket compared to its 3.64 billion daily active FOA users that contribute to its vast advertising revenue line item. Still, theoretically, if Muse gained 50 million American users, and generated $300 (several hundred) annually from each, it would imply $15 billion of annual sales in the future.
International users could add significant revenue potential as well, but would also likely generate much less revenue per user. For reference, Meta’s global FOA revenue per user was just $66.80 over the last 12 months, indicating that revenue per American user is several times higher than this. Meta says it is building capacity to serve over 1 billion Muse users.
Citibank estimates that Muse could generate $27 billion in revenue by 2030. Meanwhile, Deutsche Bank forecasts $36 billion in Muse sales by 2030 in its bull scenario, while projecting just $2.4 billion in its bear scenario.
A key question as Meta looks to scale Muse to such a large user base is how much competition will crop up in the personal AI agent arena, and whether Muse’s growth might slow as a result. However, the product has gained huge traction early on, and few companies have the infrastructure to serve as many users as Meta.
2027 CapEx Guidance vs. Muse Metrics: Key Numbers for Meta’s Next Report
Despite Meta’s post-earnings fall, sentiment has improved meaningfully since its Q2 report, and analysts continue to have a positive outlook on the stock. Meta’s Q4 earnings report should contain its 2027 CapEx guidance and also give the company more time to scale Muse adoption. How much Meta plans to spend next year relative to its results and expectations for Muse will be key watch items for investors.
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