Shares rose 5.6% in after-hours trading as Wall Street looked past a nearly $10 billion legal bill and focused on a core advertising business that keeps accelerating. Meta beat revenue expectations with $64.6 billion in Q3 sales, up 26% year over year, topping the $63.3 billion analysts had forecast. The question now is whether the company's enormous AI bets — and its plan to fund them with a new kind of stock — will pay off before they weigh down returns.
• The Ad Business Absorbed a $10 Billion Hit Without Flinching
The entire earnings miss traces to one line item: a $9.89 billion settlement charge from an agreement with 52 state attorneys general over teen mental health claims. Strip it out, and diluted EPS would have been $7.40, comfortably above estimates.
Underneath the legal noise, Meta showed 10% more ads than a year ago and charged advertisers 14% more per ad on average — a pricing-power signal that matters more to long-term shareholders than a one-time write-down. But additional youth-related litigation trials are scheduled in the coming months, so the legal story is not fully closed.
• AI Spending Now Exceeds the Cash the Business Generates
In Q3, capital spending hit $34.91 billion — more than the $32.79 billion the business brought in from operations, a first since 2012.
Meta raised the floor of its 2026 capex range by $5 billion to $135–$145 billion. That pushed free cash flow to negative $2.12 billion — a jarring number for a company that has long been a cash machine. Investors are betting revenue growth will catch up, but the margin of safety is shrinking.
• Non-Voting Shares Let Zuckerberg Raise Cash and Keep Control
Meta's board approved new publicly listed, non-voting Class C shares effective January 2027.
Every existing shareholder gets one Class C share per share they own.
These non-voting shares give Meta a currency for acquisitions and employee pay without diluting voting power — practically speaking, Zuckerberg keeps his roughly 61% voting grip while the company gains the ability to sell stock to fund AI infrastructure. Alphabet made a similar move in 2014 , and that playbook is now being replicated.
• Strong Q4 Guidance Signals Confidence, but the Burn Rate Is Real
Meta projects Q4 revenue of $73–$76 billion, bracketing the $73.74 billion consensus. That implies accelerating growth. Yet with $82.45 billion in cash on hand and capex running at this pace, the balance sheet runway is finite — exactly why the new share class exists.