Meta Shares Plunge as Spending Spree Overshadows Record Revenue

Investors delivered a harsh verdict on Meta’s latest earnings report, sending the social media giant’s market value plummeting by nearly $200 billion in a single trading session. The dramatic sell-off occurred despite the company posting impressive third-quarter revenue growth, highlighting mounting concerns about Mark Zuckerberg’s aggressive artificial intelligence investments and unexpected tax liabilities.

Record Performance Meets Financial Headwinds

Meta’s core advertising business demonstrated remarkable strength during the third quarter, generating $51.24 billion in revenue—a 26% year-over-year increase that comfortably exceeded analyst projections. The company’s advertising metrics showed robust performance with a 14% increase in ad impressions coupled with a 10% rise in average ad prices.

However, these positive results were completely overshadowed by a stunning earnings miss. The company reported just $1.05 per share in earnings, dramatically below the $6.70 consensus estimate. This shortfall stemmed primarily from a substantial $15.93 billion tax charge related to the newly enacted “One Big Beautiful Bill Act” legislation. Excluding this one-time tax impact, Meta would have achieved $7.25 per share, surpassing market expectations.

Spending Concerns Intensify

Market participants expressed greater alarm about Meta’s escalating expenditure forecasts. The company significantly raised its 2025 capital expenditure guidance to a range of $70-72 billion while indicating that 2026 investments would reach “substantially higher” levels.

Should investors sell immediately? Or is it worth buying Meta?

These massive outflows are predominantly directed toward data center infrastructure and computing resources to support Meta’s artificial intelligence initiatives. Simultaneously, the company’s Reality Labs division—the operational center for its metaverse and AI hardware ambitions—continued to hemorrhage cash, registering $4.43 billion in losses during the quarter alone.

Divided Analyst Sentiment Emerges

Financial experts displayed sharply contrasting views following the earnings release. UBS maintained confidence in Meta’s advertising momentum by raising its price target, while other firms adopted more cautious stances. Oppenheimer downgraded the stock, and Benchmark shifted its rating to “Hold,” explicitly warning about “runaway investments” that lack a clear path to achieving reasonable returns on capital.

The central debate among market observers revolves around whether Zuckerberg’s multi-billion dollar AI investments will ultimately generate long-term value or permanently compress corporate margins. Until this fundamental question finds resolution, Meta shares face continued pressure from uncertain investors weighing ambitious technological bets against immediate financial performance.