Q3 grew 11.8 percent and ads were cut to $2.7 billion. I model 10 percent 2027 growth and $3.65 of earnings at 19 times, a $69 stock, a market-like return from $64.61.
Key points
- $12.87 billion Q3 revenue grew 11.8 percent; operating margin was 34.6 percent on expense timing.
- $2.7 billion is the new 2026 ad forecast, down from about $3 billion on product delays.
- $3.65 is my 2027 EPS on 10 percent revenue growth, a 32.5 percent margin and 4.10 billion shares.
The call
The $64.61 after-hours price pays about 17.7 times my 2027 EPS of $3.65. That is a slowing-growth multiple after a 45 percent twelve-month drop, not a distressed one.
Revenue growth slowing into 2027 (percent)GAAP revenue y/y. 2026E company guide; 2027E my estimate. Source: 10-K, 8-K Oct 20 2026.
I expect 10 percent 2027 revenue growth to $56.2 billion as ads lag and US execution stays mixed, with margin at 32.5 percent. Nineteen times that EPS is $69. The market is about right: it already treats growth as slowing toward 10 percent.
Valuation
| Item | Figure |
|---|
| 2026 revenue (company) | $51.1 billion |
| 2027 revenue (my 10% growth) | $56.2 billion |
| 2027 operating margin (my estimate) | 32.5% |
| 2027 EPS (4.10 billion shares) | $3.65 |
| Multiple | 19 times |
| 12-month target | $69 |
Nineteen times sits between the 17.7 times the price pays and the 21 times I used when growth looked closer to 10.5 percent. Upside if ads catch the old $3 billion path is a few dollars; downside if January growth language is single-digit is similar. That symmetry is a hold.
Operating margin and my 2027 path- Operating margin
- My annual
Quarterly GAAP operating margin. 2026E 31.5% company; 2027E 32.5% mine. 8-K Oct 20 2026.
Risks
- 2027 revenue growth lands below 9 percent; watch January guidance versus a $56 billion year.
- Ad product delays persist into 2027; watch comments versus the $2.7 billion 2026 run rate.
- US churn worsens after price rises; watch management’s next qualitative churn line.
What would change my mind
A January cut that takes 2027 growth below 9 percent, or a restoration of the $3 billion ad path with 11 percent growth, would move the target.