Meta revenue +26%, but stock falls 3%—$50 billion gone just like that
What I see:
Meta reported its Q3 results last night. The numbers were genuinely strong, but I think this stock is going down.
Revenue came in at $64.6 billion, up 26% year over year and well above analysts’ $63.3 billion estimate. Ad prices also rose 14%.
EPS was $3.83, beating expectations of $3.57. But there’s a huge catch: the earnings report included a $9.89 billion legal expense related to the teen-safety settlement. The 52 states could collectively receive up to $18 billion, paid over 10 years.
Strip that expense out, and actual EPS was $7.40—well above the expected $6.54. Revenue, earnings, and Q4 guidance all beat expectations.
After the report came out, 13 brokerages raised their price targets, with an average of $815.
So what happened? The stock was down 3% premarket, wiping out $50 billion in market value.
That was the most gut-wrenching moment of last night’s earnings season: Meta delivered an almost perfect report, and the market sold off anyway.
The bulls’ case:
There are solid arguments. Deutsche Bank said AI investment is already translating into real ad monetization and user engagement. AI infrastructure is no longer a cost—it’s a money-printing machine.
Revenue up 26%, ad prices up 14%, and Q4 guidance above expectations: the core growth engine is firing on all cylinders.
Those 13 price-target hikes weren’t for nothing. The average target of $815 shows that Wall Street believes AI investment will pay off in the future.
The bears’ case:
The arguments are even more painful. Meta’s 2026 AI capital spending guidance is $135–145 billion, while Q3 free cash flow plunged to negative $2.1 billion. It was positive in the same quarter last year.
The company is burning cash faster than it’s making money. That’s the key reason the stock got hit premarket last night.
And there’s another big risk hanging over it: a New Mexico court just ruled that Meta must pay $25 billion in data privacy penalties. Meta says it will appeal, but this isn’t over.
The company also issued new Class C shares with no voting rights, effective next January. The market isn’t stupid; everyone knows this is laying the groundwork for the next round of financing.
My take:
I lean a bit toward the bears—not because Meta is a bad company, but because the market is starting to price in the cost of AI spending.
Investors used to focus on revenue in earnings reports. Now they need to watch cash flow. Negative free cash flow is a far more alarming signal than a revenue beat.
Put simply, whether the stock rises depends on the AI dream; whether it falls depends on the cost of all that spending. Last night, the numbers lost.
Scenarios:
If the stock gets back above $700 and holds, the bulls can finally breathe. First up is $713 (1-hour chart resistance), then $749.
If it breaks below $675 (today’s premarket low), the bears are in control, with $662—the 50-day moving average—as the next stop.
What I’m planning to do:
I can’t bring myself to buy or sell here. I’ll wait to see which way $675 breaks.
If it really breaks below $675, I won’t chase it short either. There’s too much going on with Meta’s news flow, so I’ll mainly watch.
If it gets back above $700 and holds, I’ll admit I was wrong—the bearish thesis is out the window.
Back above $700 toward $713–749, or below $675 on the way to $662? I’m betting on the latter. Negative cash flow is a tough hurdle to clear. What about you?
$META $NVDA $GOOG
#Meta #USStocks
What I see:
Meta reported its Q3 results last night. The numbers were genuinely strong, but I think this stock is going down.
Revenue came in at $64.6 billion, up 26% year over year and well above analysts’ $63.3 billion estimate. Ad prices also rose 14%.
EPS was $3.83, beating expectations of $3.57. But there’s a huge catch: the earnings report included a $9.89 billion legal expense related to the teen-safety settlement. The 52 states could collectively receive up to $18 billion, paid over 10 years.
Strip that expense out, and actual EPS was $7.40—well above the expected $6.54. Revenue, earnings, and Q4 guidance all beat expectations.
After the report came out, 13 brokerages raised their price targets, with an average of $815.
So what happened? The stock was down 3% premarket, wiping out $50 billion in market value.
That was the most gut-wrenching moment of last night’s earnings season: Meta delivered an almost perfect report, and the market sold off anyway.
The bulls’ case:
There are solid arguments. Deutsche Bank said AI investment is already translating into real ad monetization and user engagement. AI infrastructure is no longer a cost—it’s a money-printing machine.
Revenue up 26%, ad prices up 14%, and Q4 guidance above expectations: the core growth engine is firing on all cylinders.
Those 13 price-target hikes weren’t for nothing. The average target of $815 shows that Wall Street believes AI investment will pay off in the future.
The bears’ case:
The arguments are even more painful. Meta’s 2026 AI capital spending guidance is $135–145 billion, while Q3 free cash flow plunged to negative $2.1 billion. It was positive in the same quarter last year.
The company is burning cash faster than it’s making money. That’s the key reason the stock got hit premarket last night.
And there’s another big risk hanging over it: a New Mexico court just ruled that Meta must pay $25 billion in data privacy penalties. Meta says it will appeal, but this isn’t over.
The company also issued new Class C shares with no voting rights, effective next January. The market isn’t stupid; everyone knows this is laying the groundwork for the next round of financing.
My take:
I lean a bit toward the bears—not because Meta is a bad company, but because the market is starting to price in the cost of AI spending.
Investors used to focus on revenue in earnings reports. Now they need to watch cash flow. Negative free cash flow is a far more alarming signal than a revenue beat.
Put simply, whether the stock rises depends on the AI dream; whether it falls depends on the cost of all that spending. Last night, the numbers lost.
Scenarios:
If the stock gets back above $700 and holds, the bulls can finally breathe. First up is $713 (1-hour chart resistance), then $749.
If it breaks below $675 (today’s premarket low), the bears are in control, with $662—the 50-day moving average—as the next stop.
What I’m planning to do:
I can’t bring myself to buy or sell here. I’ll wait to see which way $675 breaks.
If it really breaks below $675, I won’t chase it short either. There’s too much going on with Meta’s news flow, so I’ll mainly watch.
If it gets back above $700 and holds, I’ll admit I was wrong—the bearish thesis is out the window.
Back above $700 toward $713–749, or below $675 on the way to $662? I’m betting on the latter. Negative cash flow is a tough hurdle to clear. What about you?
$META $NVDA $GOOG
#Meta #USStocks