Meta Platforms (NASDAQ:META) has made a habit this year of posting a strong quarter and then seeing its stock sink the next day. Shares fell around 7% on Oct. 22, after the company said third-quarter revenue rose 26% year over year. This followed post-earnings drops of about 9% on April 30 and 8% on July 30.
That’s a big change from January, when the stock popped about 10% after Meta’s fourth-quarter report.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
The stock now trades near $649 as I write, about 17% under its Sept. 24 close of about $778 (its highest close in about a year). Yet, for all the selling, shares are down just about 3% for 2026.
Looking back at each report, I think the selling had more to do with what Meta is spending than with what it’s earning.
Image source: Getty Images.
Spending, every time
The first-quarter numbers in April were excellent on their own. Revenue climbed 33% year over year to $56.3 billion, Meta’s fastest growth since 2021.
But management also lifted its 2026 outlook for capital expenditures (including principal payments on finance leases) to a range of $125 billion to $145 billion, up from $115 billion to $135 billion. CEO Mark Zuckerberg said on the first-quarter earnings call that most of the increase was “due to higher component costs, particularly memory pricing.”
July’s report showed what that spending does to cash. Free cash flow dropped to $784 million in the second quarter, from $8.5 billion the year before. And Meta’s third-quarter revenue forecast pointed to year-over-year growth between 19% and 25%, down from 28%.
In October, free cash flow went negative, at minus $2.1 billion. Meta also raised the bottom of its 2026 spending range to $135 billion and said it plans to keep “investing aggressively” in 2027.
Meta’s revenue growth has slowed a bit this year, from 33% in the first quarter to 28% in the second and 26% in the third. But for a social media company taking in around $64.6 billion a quarter, 26% growth is still impressive.
Showing how steady the main business has been, Meta’s operating cash flow was $32.2 billion in the first quarter, $31.9 billion in the second, and $32.8 billion in the third. Capital expenditures, meanwhile, climbed every quarter, from $19.8 billion to $31.1 billion to $34.9 billion. In other words, nearly all of the slide in free cash flow came from spending, but the cash coming in hardly budged.
