By Adam Levine

This past week, Meta Platforms filed paperwork outlining incentive plans for senior executives not named Mark Zuckerberg. This wouldn't be news except for the fact that the strike prices for the included stock options range from $1,116 a share to $3,727. Ultimately, for the options to all be in the money, Meta would need a market value of at least $9.6 trillion.

Put another way: Meta shares would have to rise 580%, or an annualized 47%, over the five-year terms of the options.

"This is a big bet," a Meta spokesperson tells Barron's. "These pay packages will not be realized unless Meta achieves massive future success, benefiting all of our shareholders. As with all stock options, there is only value if the share price meaningfully exceeds the exercise price, and in this case, it must be on an exceedingly aggressive five-year timeline."

And it is "exceedingly aggressive." Meta, one of the largest companies in the world, would have to return to the earnings growth rates it last saw in the 2010s as a relatively young company in the emerging digital ad space.

To be sure, Meta has some room to grow its price/earnings multiple. Until early 2022, the company's forward P/E ratio was above that of the broad S&P 500 index. Since then it has roughly tracked the index's valuation. By Friday, the P/E had dipped to 17, well below the S&P 500's 20.

The $9 trillion market value could be a little more feasible if investors return to paying a richer multiple for the company's earnings. If the stock's P/E rose to 30, EPS would have to increase by 33% a year, still a tall task. Even at 40 times, Meta would have to grow earnings 26% earnings annually for five years.

Meta wouldn't get specific when I asked how a $3,700 share price within five years might be possible. But, likely, the dream is that Meta leverages its 3.6 billion users worldwide and becomes the leading provider of consumer artificial-intelligence services, maybe through its AI smart glasses.

To pull this off with just digital advertising, Wells Fargo analyst Ken Gawrelski says, Meta would have to go from roughly a 30% market share to more than 55%. "To get to these strike prices means that Meta must create new revenue streams, and it can't be strictly digital advertising, " he says.

To that end, Meta is opening up the spigot. It spent $111 billion on capital expenditures for AI data centers in the past two years, and Gawrelski estimates that the total for the next three years will be half a trillion dollars. The company also has mounting debt and lease liabilities related to its AI ambitions. While Amazon.com, Microsoft, and Alphabet spend even more, their cloud units rent out most of the AI servers they buy, and those revenue streams are growing rapidly.

Meta's data centers, on the other hand, are all for itself: for its own research, for raising engagement and the effectiveness of ad-targeting, and ultimately for serving up new AI experiences to users. Meta has also been on a hiring-and-firing binge, bringing in expensive new AI researchers and executives, while reorganizing other units and laying off existing staff.

This is a far more expensive and disruptive shift than the company's failed pivot to the metaverse.

The mounting depreciation from all of its capex will become a bigger drag on Meta's earnings in the coming years. If Meta hits its 2026 capex target, it will have little operational cash flow remaining for share buybacks; curtailing that cash-return program could depress the stock price.

A bigger long-term risk came into focus this past week after two court decisions went against Meta. In New Mexico, a jury settled on a $375 million penalty after the state sued the company under a consumer protection law claiming that Meta misled children and parents when it marketed Facebook and Instagram as safe environments for minors. A second phase of the trial is coming in which the state's attorney general will be asking a judge to grant further relief, including forcing Meta to verify the age of users in the state.

Meanwhile, in a California state court, a woman won a trial in which she claimed Meta's apps were designed to be addictive, harming her mental health as a child and exposing her to exploitation by adults. The award was $6 million total, with Meta splitting the bill with Alphabet, also a defendant in the case.

"We respectfully disagree with the verdict and will appeal," Meta said in an emailed statement. "Teen mental health is profoundly complex and cannot be linked to a single app. We will continue to defend ourselves vigorously as every case is different, and we remain confident in our record of protecting teens online."

Meta stock fell 8% on Thursday following the back-to-back court losses and was down more on Friday.

These lawsuits are the tip of the iceberg. There are thousands of individual suits like the Los Angeles case, many of which have been consolidated in federal court for pretrial discovery. Cutting across political boundaries, hundreds of school districts are suing social-media companies with Meta as the primary defendant, as well as a majority of states.

One potential outcome is that every social-media company could be forced to verify the ages of their users, cutting off certain interactions. That's an effort tech companies have sought to avoid because it has the potential to slow growth.

It would certainly make $9 trillion a bigger mountain to climb.

Write to Adam Levine at adam.levine@barrons.com

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March 27, 2026 15:44 ET (19:44 GMT)

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