Meta (META) Third-Quarter Free Cash Flow Falls $2.12B Amid Increased Capex

Meta Platforms Inc. (META) shares dropped about 6% following the release of its third-quarter earnings, which revealed a negative free cash flow of $2.12 billion. The company raised its forecast for capital expenditures (capex) for the full year to range between $135 billion and $145 billion, up from the previous floor of $130 billion.

Revenue for the quarter was $64.60 billion, a 26% increase year-over-year, exceeding analyst expectations of $63.37 billion. Earnings per share (EPS) were reported at $3.83, though a comparison to the anticipated $5.75 EPS by Wall Street was unclear. Additionally, Meta announced the creation of a new class of nonvoting Class C common stock to preserve its founder-led structure and support growth financing. CEO Mark Zuckerberg also disclosed that he might leave California if a proposed wealth tax passes, given potential significant tax liabilities linked to his Meta stock ownership.

The rise in Meta’s credit default swap spreads to all-time highs signals growing investor concern over the company’s credit risk related to its expanded investments in artificial intelligence (AI). This financial environment reflects the challenges of heavy AI spending and increased capex. For investors, the expanded capex range and negative free cash flow indicate higher costs and investment risk, affecting Meta’s near-term financial returns.