TLDR
- Meta Platforms (META) stock closed Thursday at $648.85, down 7%, a day after reporting record Q3 revenue of $64.6 billion.
- Free cash flow turned negative at $2.12 billion, the first such quarter as a public company.
- Meta raised the low end of its 2026 capex range to $135 billion to $145 billion, and spending commitments reached $825 billion.
- Meta’s five-year credit default swap hit a record 119.3 basis points.
- Meta will issue non-voting Class C stock to Class A holders, working like a 2-for-1 split.
Meta Platforms (META) stock closed Thursday at $648.85, down $48.67 or 7%. The drop came a day after the company beat third-quarter revenue estimates.
The stock had climbed as high as $737.70 in after-hours trading on Wednesday. By Thursday’s low of $648.26, it had swung 12% in under 18 hours.
Revenue hit a record $64.6 billion, up 26% and above the $63.3 billion analysts expected. Ad revenue rose 26% to $63.06 billion.
Meta guided fourth-quarter revenue to $73 billion to $76 billion. Daily active people reached 3.64 billion, just under the 3.65 billion forecast.
GAAP earnings per share came in at $3.83 against $3.56 expected. A $9.89 billion legal charge from the teen mental health settlement weighed on that figure, and EPS would have been $7.40 without it.
Spending Is the Worry
Meta posted negative free cash flow of $2.12 billion, its first as a public company. Capital spending of $34.91 billion topped operating cash flow of $32.79 billion.
The company raised the low end of its 2026 capex range to $135 billion to $145 billion. Spending commitments also grew to $825 billion from $700 billion in July.
Investors sold AI names across the board. The Nasdaq Composite fell about 2%, and Alphabet and Microsoft each lost about 2%.
Meta’s five-year credit default swap rose to 119.3 basis points, the highest since the contract began trading. Swaps on Oracle, Microsoft and Broadcom also widened.
Analysts stayed mostly upbeat, pointing to the Muse AI agent. Muse reached 10 million users in the U.S. and Canada within six weeks, and 25% of them use it daily.
CEO Mark Zuckerberg said Muse will be “highly profitable over multiple years” if compute efficiency keeps improving. Wall Street was not in a patient mood on Thursday.
Class C Stock and Legal Headlines
Meta will issue non-voting Class C stock to all Class A holders, which works like a 2-for-1 split. The dividend takes effect January 19.
The move is meant to keep Zuckerberg’s voting control if California’s Proposition 40 passes. The measure calls for a 5% tax on taxpayers with assets over $1 billion.
CFO Susan Li said Meta had no specific financing plans to announce. Before the report, a New Mexico judge ordered the company to pay $25 billion in the state’s consumer-harms case.
Thursday’s low of $648.26 sat just below Meta’s 2026 opening price of $648.74. In Friday premarket trading, the stock was at $648.61, down 24 cents.
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