Facebook — now known as Meta Platforms (NASDAQ:FB) — is trying to change the narrative to a positive tone with its new name and upcoming MVRS ticker change on Dec. 1. That will help investors get excited about FB stock again. This includes its new focus on the metaverse and its desire to move into virtual reality (VR) as a social and shopping platform.

However, the problem is — as Barron’s points out — this is going to take a while to completely occur, especially with investors. Moreover, the company is facing growing competition from Apple (NASDAQ:AAPL), which cut off advertisers from certain Facebook users who no longer wanted to be tracked. These changes make it more difficult for companies to assess the effectiveness of online ads. Plus, TikTok is eating into Facebook’s advertising market share as well.

Analysts were keen to point out that Facebook’s revenue, although up 35% year-over-year (YOY), was lower than expectations. According to FactSet, analysts were predicting $29.56 billion. Facebook’s third-quarter revenue came in at $29.01 billion, also lower than than the prior-quarter revenue of $29.08 billion.

In addition to this, Bloomberg also reported that an internal March document projected that the number of Facebook users is slated to fall. For example, the platform’s U.S. young adult users are in decline and projected to fall by 4% in the next two years. That could lead to lower revenue in the long run.

FB Stock: A Well-Received Rebranding and Strong FCF

So far, it appears that Wall Street analysts are positive about this new metaverse rebranding for FB stock and the company. Meta plans on creating a separate reporting segment called Reality Labs, which will include its virtual and augmented-reality (AR) products, separate from the Facebook social platform which produces ad revenue.

According to Barron’s, Mark Zuckerberg sees the metaverse as a “successor to the Internet.” It will be where “people can interact via avatars in virtual spaces that allow for activities such as entertainment, gaming, and shopping.”

The Barron’s article quoted several buy-side portfolio managers who liked the new metaverse platform concept. They also see it as a way to broaden the company’s revenue base. This will help Facebook and Meta get away from the ad revenue dampening effect stemming from Apple’s mobile privacy policy changes.

No matter what happens in the short term, though, perhaps what’s most important is that this company is still a very strong cash-flow-producing machine. For example, in Q3, the company reported solid free cash flow (FCF) production of $9.547 billion.

This was more than 60% higher than the prior-year period’s $5.95 billion. It was also 12.2% higher than the company’s Q2 FCF of $8.51 billion. Moreover — and probably even more importantly — the Q3 FCF margin increased.

For example, based on its $29.01 billion in revenue, the $9.547 billion in FCF represents a 32.9% FCF margin. This is much higher than the 29.3% Q2 2021 FCF margin.

We can use this to value FB stock going forward.

What Meta Platforms Is Worth

Analysts surveyed by Seeking Alpha forecast 2022 revenue of $140.27 billion. This is up 19.3% over the 2021 forecast revenue of $117.6 billion.

As a result, using a 30% margin forecast (lower than the Q3 margin, but higher than the Q2) with the 2022 revenue forecast, we can derive a new FCF target. So, for example, multiplying 0.30 times $140.27 billion in 2022 revenue gives us a target FCF of $42.08 billion for 2022.

We can use this to estimate the FB target market value. For example, if we divide $42 billion by 3.0% — its traditional FCF yield metric — we get a value of $1.4 trillion.

That is 47.8% higher than Meta Platforms’ recent market capitalization of $949 billion. In other words, FB stock is worth nearly 47.8% more than the Nov. 8 close price of $338.62 per share. That works out to a target of $500 per share.

Therefore, investors in FB stock today have a good chance of making almost 5o% more at $500. This is based solely on the company’s powerful FCF production using its 3.0% traditional valuation FCF yield metric.

On the date of publication, Mark R. Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.