Key Moments
- Meta Platforms reported third-quarter revenue of $64.60 billion and earnings per share of $3.83, both ahead of analyst expectations.
- Annual capital expenditure guidance was tightened to a range of $135 billion to $145 billion as Meta accelerates AI infrastructure spending.
- The board approved a new non-voting Class C common stock and a one-time stock dividend expected to mimic a two-for-one split on Class A shares’ market price.
Market Reaction and Top-Line Performance
Investing.com – Meta Platforms traded lower in premarket action, with the stock down more than 1%, even after the company delivered stronger-than-expected third-quarter results driven by robust advertising demand and signaled further gains in the current period.
For the quarter ended September 30, the Facebook and Instagram owner posted revenue of $64.60 billion, an increase of 26% from the same period a year earlier and above Wall Street’s consensus estimate of $63.33 billion. Earnings per share rose to $3.83 from $1.05 a year earlier, topping expectations of $3.57, despite a $9.89 billion legal charge tied to a settlement with 52 state attorneys general related to teen mental health litigation.
Advertising Momentum and User Engagement
Advertising revenue advanced 26% to $63.06 billion. Chief Executive Mark Zuckerberg said Facebook and Instagram were experiencing record levels of engagement, describing usage on the platforms as hitting all-time highs.
Outlook and Capital Expenditure Plan
Meta projected fourth-quarter revenue in a range of $73 billion to $76 billion, with the midpoint coming in above analyst forecasts. The company also refined its full-year expense framework as it continues to deploy significant resources into AI infrastructure.
Annual capital spending is now expected to be between $135 billion and $145 billion, compared with the prior range of $130 billion to $145 billion. The company framed the increased focus on AI-related investments as a key driver of this higher capex outlook.
| Metric | Current Period | Year-Ago Period / Prior Guidance | Street Consensus / Prior Range |
|---|---|---|---|
| Total revenue | $64.60 billion | – | $63.33 billion |
| Earnings per share | $3.83 | $1.05 | $3.57 |
| Advertising revenue | $63.06 billion | – | – |
| Q4 revenue outlook | $73 billion – $76 billion | – | – |
| Full-year capex outlook | $135 billion – $145 billion | $130 billion – $145 billion | – |
| Legal charge | $9.89 billion | – | – |
New Class C Stock and Stock Dividend Structure
The board approved the creation of a new publicly traded, non-voting Class C common stock, which is scheduled to become effective on January 19. Meta plans to issue one Class C share for every outstanding Class A and Class B share via a one-time stock dividend.
The company said it expects this distribution to effectively function as a two-for-one stock split in terms of the market price of Class A shares, while leaving existing voting rights unchanged. Management indicated that the additional share class is designed to provide more flexibility for future capital raising, employee equity compensation, acquisitions, and other corporate needs.
The decision was unanimously recommended by a special committee composed of independent directors and subsequently approved through shareholder written consent.
AI Strategy: Muse and Business Agents
On the earnings call, Zuckerberg emphasized early adoption trends for Muse, Meta’s AI assistant, noting that around 25% of people who downloaded the product use it on a daily basis. He outlined an ambition to develop a large-scale Muse network that enables AI agents to collaborate.
Zuckerberg acknowledged that running Muse currently requires significant computing resources, but said he expects the product to become profitable over time as compute efficiency improves.
External commentary pointed to the dual-track nature of Meta’s strategy. “Meta is running two races: maximizing its advertising engine with Advantage+ while building its next growth drivers through Muse and Business Agents. Strong ad growth is funding its aggressive AI spending, but investors need evidence that investment will translate into lasting returns. Muse offers promise, though monetization remains unproven. The after-hours reaction suggests investors are encouraged by Meta’s core business today and its AI potential tomorrow,” said Jake Behan, Head of Capital Markets at Direxion.
Profitability, Legal Impact, and Reality Labs
Meta’s operating income came in below market expectations, with the shortfall linked to the sizable legal charge recorded in the quarter. The company stated that it expects full-year operating income to surpass 2025 levels when excluding the third-quarter legal cost.
Reality Labs, the division focused on virtual and augmented reality, continued to generate operating losses. However, the loss from this segment was narrower than analysts had forecast.
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