Meta Platforms experienced a significant stock decline on Thursday following the release of its third-quarter financial results and updated capital spending projections. The company’s shares dropped nearly 7% in response to disappointing cash flow metrics and expanded investment plans.
The social media company reported negative free cash flow of $2.12 billion during the third quarter, a development that concerned investors monitoring the company’s financial health. Additionally, Meta raised the lower bound of its full-year capital expenditure guidance to $135 billion, up from a previous floor of $130 billion, with the range extending to $145 billion. The increased spending reflects the company’s commitment to artificial intelligence infrastructure and development initiatives.
Financial market indicators reflected broader investor concerns about the company’s trajectory. The spread on Meta’s five-year credit default swaps reached all-time highs on Thursday, signaling heightened credit risk concerns among market participants as the company deepens its investment in AI capabilities.
On the revenue side, Meta demonstrated stronger performance in its core business operations. Third-quarter revenue reached $64.60 billion, representing a 26% increase compared to the same period a year prior and exceeding analyst expectations of $63.37 billion. Reported earnings per share stood at $3.83, though comparability with Wall Street’s $5.75 per share forecast was unclear due to definitional differences.
The company also announced structural changes to its share class system, introducing a new nonvoting Class C common stock designed to preserve the founder-led governance structure and support future financing flexibility. According to regulatory filings, this action was undertaken partly to retain CEO Mark Zuckerberg, who had expressed concerns about potential California state tax liabilities that could result from proposed wealth tax legislation.
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