Meta falls 7% as AI spending outruns the cash its business makes
Why is Meta Platforms stock down today?
Meta beat forecasts on sales and outlook, but AI spending pushed its quarterly free cash flow below zero, and it created non-voting shares it can sell to raise money. Investors focused on the bill for the AI build-out, and the stock closed down 7%.
- Move
- ▼ 7.0%
- Price
- $697.52 → $648.85
- Value lost
- ~$124B
- Sales growth
- +26%
- Quarter's free cash flow
- −$2.1B
- 2026 spending plan
- $135–145B
Closing prices on Oct 22, 2026, per Yahoo Finance. Value lost = market cap × the day's move. In Thursday's after-hours trading the stock barely moved (about −0.4%, per Yahoo Finance).
What happened
- Meta reported July–September results after the close on Wednesday, Oct 21. Sales rose 26% to $64.6 billion, above the roughly $63.3 billion Wall Street expected, and the midpoint of its $73–76 billion fourth-quarter forecast topped the ~$73.7 billion analysts expected.
- The stock rose about 2% in Wednesday’s after-hours trading, then gave the gain back as investors worked through the details.
- On Thursday, Oct 22, it fell from $697.52 to $648.85, down 7% (almost 8% at the low), erasing about $124 billion in market value.
- The S&P 500 fell 1.2% and the Nasdaq 2.6%, and chip and data-center power stocks fell hard. CNBC tied the sell-off to AI-spending worries and oil prices.
The quarter in numbers
| Measure | July–September 2026 |
|---|---|
| Sales | $64.6 billion, up 26% |
| Average price per ad / ad impressions | Up 14% / up 10% |
| Daily users | About 3.64 billion |
| Total costs | Up 68%, including the legal charge |
| Operating cash flow | About $32.8 billion |
| Capex | $34.9 billion |
| Free cash flow | −$2.1 billion |
| 2026 capex plan | $135–145 billion (was $130–145 billion) |
| Legal charge | $9.9 billion, settlement with 52 attorneys general over teen mental health; excluded from adjusted figures |
| Earnings per share | $3.83 (about $3.56 expected), or $7.40 excluding the legal charge |
Why the market reacted this way
- AI spending used up all the cash Meta’s business generated this quarter. For years the ad business paid for everything with plenty to spare.
- The spending is still rising. Meta has spent about $86 billion this year, so the new $135–145 billion plan implies roughly $49–59 billion in the fourth quarter alone (our math). Meta says it is still early in planning its 2027 budget, and investors expect a bigger number.
- Meta created non-voting Class C shares that it says it can use to raise capital, pay employees or make acquisitions. Investors see them as a likely way to fund more spending, which means dilution risk until Meta says how many it will sell. The structure also protects Mark Zuckerberg’s control: he holds about 61% of the votes with about 13% of the company.
- Meta’s credit default swaps hit a record high on Thursday. Reuters tied the move to worries about the cost of the AI build-out.
Does this change Meta’s future?
What did NOT change
- Demand for Meta’s ads and apps held up, and more than 10 million people in the US and Canada signed up for its new Muse AI assistant in about six weeks.
What DID change
- Selling shares or borrowing more is now a real possibility, and the stock now hinges on Meta’s 2027 spending plan.
Our read
The ad business is not the problem; the open question is how big the 2027 AI bill will be and how Meta pays for it.
The same worry hit data-center power suppliers: GE Vernova sinks 11% on Meta’s AI spending scare, not its own news
What to watch next
- Now to Jan 19, 2027
- Does Meta sell new shares or borrow more? Its CFO said there are no specific financing plans to announce yet; a JPMorgan analyst said Meta could raise money before January.
- From Jan 19, 2027
- The charter change creating the Class C shares takes effect. The share dividend follows on dates Meta hasn't set yet.
- Late Jan 2027 (expected)
- Fourth-quarter results and likely the first 2027 spending plan. Meta says it is still early in planning next year's budget.
Quick questions
Is Meta in financial trouble?
No. Meta is still profitable and holds about $82 billion in cash and marketable securities.
Will the Class C shares change what I own?
Shareholders will get one free, non-voting Class C share for each share they hold, paid after Meta's charter change takes effect on Jan 19, 2027 (payment date not yet set). Meta expects it to work like a 2-for-1 split: the share price should roughly halve, and voting power doesn't change.
+ 6 more
Accessed Oct 22, 2026: Yahoo Finance: non-voting shares · SiliconANGLE · Investing.com: earnings reaction · 24/7 Wall St.: AI power stocks
Accessed Oct 23, 2026: Motley Fool: market close · CNBC: market live updates